BITZLATO HALTS WITHDRAWALS AMID CO-FOUNDER’S $700M GUILTY PLEA

Bitzlato, a Hong Kong-based cryptocurrency exchange, has temporarily suspended withdrawals following legal developments involving its co-founder, Anatoly Legkodymov. This move comes as the exchange prepares for court proceedings related to the seizure of user assets in France.

Temporary Suspension of Withdrawals

The withdrawal halt was announced to users through a Telegram message, indicating a temporary measure as the Bitzlato team navigates upcoming legal challenges. This suspension follows shortly after Legkodymov’s guilty plea to money laundering charges in New York and his agreement to shut down the exchange.

Legal Troubles for Bitzlato

Legkodymov’s arrest in January by the U.S. Department of Justice (DOJ), part of an international crypto enforcement action, marked a significant turn for Bitzlato. He was accused of transmitting over $700 million in illicit funds, with the exchange being a preferred platform for darknet market users and ransomware criminals due to its lax user identification policies.

Apart from Legkodymov, other key figures of Bitzlato, including former CEO Mikhail Lunev, contractor Pavel Lerner, an undisclosed dev-ops engineer, and marketing director Alexander Goncharenko, were also apprehended by European law enforcement agencies.

Partial Asset Access and Future Uncertainties

Despite the DOJ shutting down Bitzlato’s operations and freezing its assets, the exchange managed to grant users partial access to their funds in March. Bitzlato converted its altcoin holdings to Bitcoin and allowed customers to withdraw up to 50% of their assets using a Telegram bot. However, with the recent developments, the timeline for full access to customer balances remains uncertain.

Bitzlato’s Optimism Amid Challenges

The Bitzlato team expressed determination and optimism regarding the legal proceedings in France, focusing on preparing for the upcoming court hearings. Despite the challenges faced in 2023, including the DOJ’s actions, the team noted that it was “not so bad” for the exchange, as they were able to release 70% of the balance held before the U.S. authorities intervened.

The future of Bitzlato and its ability to navigate these legal hurdles will be crucial for its customers awaiting full access to their assets and the broader cryptocurrency community watching the outcome of this case.

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