Key takeaways:
- The Bitzlato team declared it must “temporarily suspend” all Bitcoin withdrawals just weeks after the co-founder of the company consented to disband the crypto exchange.
- The company stated that this was merely a temporary solution while it got ready for and went through impending court proceedings over its users’ funds that were seized.
The Bitzlato team declared it must “temporarily suspend” all Bitcoin withdrawals just weeks after the co-founder of the company consented in a Brooklyn court to disband the cryptocurrency exchange in exchange for a guilty plea.
The company stated that this was merely a temporary solution while it got ready for and went through impending court proceedings over its users’ funds that were seized in France in a post on December 27 to its Telegram channel.
On December 6, however, Anatoly Legkodymov, the former CEO of Bitzlato, entered into a guilty plea to one count of running an illegal money services firm in exchange for dissolving Bitzlato and forfeiting $23 million in cryptocurrencies.
As part of a coordinated operation by the US Department of Justice (DoJ), the US Treasury Department, and French law enforcement, the founder was detained in Miami in January of this year. The operation resulted in the seizure of a large portion of the company’s website and infrastructure.
In March, Bitzlato enabled users to withdraw 50% of their assets that were still on the platform using a Telegram bot despite the exchange and its assets being confiscated. This marked a partial restoration of user money access.
In the months that followed, the company kept raising the maximum withdrawal amount that consumers could make, hitting 70% in November.
As the DOJ claimed the cryptocurrency exchange was an essential source of funding for the Hydra darknet marketplace, enabling users to launder money—including that which had been obtained through ransomware attacks—United States Attorney Breon Peace accused the exchange of being used by criminals as an open turnstile.
The team at KyberSwap had to cut staff count in half in order to continue operating the company following the $48.8 million theft in November. The DeFi company declared that it would create a “voluntary database” to help departing employees get new jobs in the Web3 sector.
