Bitzlato, the cryptocurrency exchange that was closed by the US Department of Justice (DOJ) in January for allegedly processing over $700 million of illegal funds, has now allowed its customers to withdraw up to 50% of their previously frozen bitcoin funds from the venue.
Granting Some Access
The company has announced that users can use the Telegram bot – bz_phoenix_bot – to move funds to another exchange or an external wallet if they wish to withdraw up to 50% of their assets. As the firm converted all altcoin holdings into BTC when the US DOJ shut down the platform two months ago, each withdrawal is processed in bitcoin. The company has also urged clients to press the “Support Bitzlato” button when using the feature to help the team “restore justice” and grant access to the remaining 50% of assets.
Some users have already withdrawn their holdings, while others have moved their stash to other exchanges, such as Bybit. On the other hand, some prefer to keep their assets at Bitzlato, hoping the entity would soon provide a service for peer-to-peer (P2P) cryptocurrency trading.
The Connection With Hydra Market
Sources suggested that the Russia-linked Bitzlato facilitated significant amounts of illicit cryptocurrency transactions for users of Hydra Market, a Dark Web marketplace involved in drug trafficking, money laundering, and other criminal activities. German law enforcement agents closed its servers in April 2022, confiscating 543 BTC, worth about $25 million at the time.
It is worth noting that Bitzlato was accused of not implementing the necessary anti-money laundering standards and requiring only minimal authorization from customers. US attorney Breon Peace stated, “The result was that Bitzlato became a safe haven for criminals, like drug dealers and ransomware groups. They knew that when police traced their funds to Bitzlato, Bitzlato would not be able to turn over its users’ true identities”.