Bitzlato suspends withdrawals weeks after founder agrees to dissolve exchange

Just weeks after Bitzlato’s co-founder agreed in a Brooklyn court to dissolve the crypto exchange as part of a guilty plea, the Bitzlato team announced it has to “temporarily suspend” all Bitcoin withdrawals.

In a Dec. 27 post to its Telegram Channel, the firm claimed this was only a temporary measure while it prepares and goes through upcoming legal hearings regarding its users’ assets seized in France.

“We are full of determination and optimism regarding this matter,” it said.

However, on Dec. 6 Bitzlato’s former CEO Anatoly Legkodymov agreed to dissolve Bitzlato and forfeit $23 million in cryptocurrency as part of a guilty plea to one count of operating an unlicensed money services business.

The founder was arrested in January this year in Miami as part of a joint crackdown by the United States Department of Justice, Treasury Department, and French law enforcement — which saw much of the firm’s infrastructure, including its website, seized.

Despite the exchange and its assets being seized, Bitzlato was able to partially restore access to user funds in March, with the firm allowing users to withdraw 50% of their assets stuck on the platform through a Telegram bot.

The firm continued to increase the amount users could withdraw in the months following, reaching 70% in November.

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United States Attorney Breon Peace accused the crypto exchange of being used as an “open turnstile by criminals,” while the DOJ alleged it was a “crucial financial resource” for the Hydra darknet marketplace, allowing users to launder funds, including those from ransomware attacks.

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