Bitzlato halts withdrawals as founder ordered to dissolve business

Bitzlato, a lesser-known cryptocurrency exchange currently facing legal difficulties, has suspended “special balance withdrawals” and technical support on its platform.

This decision was announced in a post on the exchange’s Telegram Channel.

The move comes shortly after Bitzlato co-founder and majority shareholder, Anatoly Legkodymov, pleaded guilty to charges involving a $700 million illicit transfer in the U.S. In early December, Legkodymov agreed to dissolve Bitzlato and forfeit $23 million in cryptocurrency as part of his guilty plea for operating an unlicensed money services business.

“At the moment, we are faced with the need to suspend special balance withdrawals and technical support. This is a temporary measure to prepare for and go through the upcoming court hearings regarding the seizure of user assets in France. We are determined and optimistic about this issue,” the statement explains.

Despite efforts to reassure users, Bitzlato is experiencing operational challenges. Following the founder’s arrest in Miami earlier this year, the exchange’s infrastructure, including its website, was seized in a joint operation by U.S., French, and other European law enforcement agencies. The crackdown was part of a broader investigation into Bitzlato’s alleged involvement in money laundering activities and its connections to the Hydra darknet marketplace.

Bitzlato had managed to partially restore access to user funds in March, allowing withdrawals of up to 50% through a Telegram bot. This limit was later increased to 70% in November.

The U.S. Department of Justice accuses Bitzlato of being a key financial resource for criminal activities, including laundering funds from ransomware attacks. The bulk of the exchange’s assets, about 46% of the seized $1 billion, has been linked to entities sanctioned by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) or involved in ransomware, money laundering, and cyber scams.