Bitzlato temporarily suspends all Bitcoin withdrawals

Bitzlato, a cryptocurrency exchange platform, has temporarily suspended all Bitcoin withdrawals just weeks after its co-founder, Anatoly Legkodymov, pled guilty to operating an unlicensed money services business and agreed to dissolve the exchange. 

The move comes as the company faces legal challenges related to seizing its assets in France. Despite the suspension, Bitzlato expresses determination and optimism regarding the situation.

Bitzlato’s  founder’s guilty plea leads to the dissolution

Bitzlato’s former CEO, Anatoly Legkodymov, made a significant decision in a Brooklyn court. He pleaded guilty to one count of operating an unlicensed money services business and agreed to dissolve Bitzlato. 

Additionally, Legkodymov was ordered to forfeit $23 million worth of cryptocurrency. This legal action stemmed from his arrest in Miami earlier in the year, which was part of a joint operation involving the United States Department of Justice, Treasury Department, and French law enforcement. 

This operation resulted in the seizure of a substantial portion of Bitzlato’s infrastructure, including its website.

Partial restoration of user funds

Despite the challenges posed by the legal proceedings and asset seizures, Bitzlato managed to partially restore access to user funds in March. Using a Telegram bot, the platform allowed users to withdraw 50% of their assets that had been stuck on the exchange. Over the subsequent months, the withdrawal limits gradually increased, reaching 70% by November.

The United States Attorney, Breon Peace, did not mince words when addressing Bitzlato’s alleged activities. He accused the cryptocurrency exchange of serving as an “open turnstile by criminals.” 

The Department of Justice (DOJ) also alleged that Bitzlato had played a crucial role as a financial resource for the Hydra darknet marketplace, enabling users to launder funds, including those obtained through ransomware attacks.

Impact on users

Bitzlato’s users will likely be closely monitoring the developments surrounding the temporary suspension of Bitcoin withdrawals. 

Many have already experienced a rollercoaster ride with their funds, from the initial asset seizure to the partial restoration of withdrawals. The outcome of the legal proceedings will determine the fate of these users’ assets, and the uncertainty can be unsettling for those affected.