In a recent announcement, Russia-linked cryptocurrency exchange Bitzlato revealed a temporary suspension of certain withdrawal requests, with the suspension taking effect as of Dec. 27.<h2 id="header-0">Asset seizure</h2>The decision comes in the wake of French authorities seizing Bitzlato&#39;s assets in January last year, a move that also involved international law enforcement, including U.S. authorities.In a <a href="https://t.me/bitzlato_newss/103" rel="noopener noreferrer nofollow">message</a> shared on Telegram, Bitzlato explained the suspension:&#34;… 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.&#34;<h2 id="header-1">Special balance withdrawals</h2>The specifics of transactions categorized as &#34;special balance withdrawals&#34; were not disclosed by Bitzlato, and it remains unclear whether the withdrawal freeze is applicable exclusively to users in France.Despite the asset seizure and subsequent closure of Bitzlato&#39;s website, the company asserted in its latest statement that it managed to &#34;close 70% of the balance&#34; held at the time of the service shutdown. However, no details were provided on how the company intends to fulfill its obligations with its assets frozen.Bitzlato has been under scrutiny from the U.S. Treasury, which identified the exchange as a money laundering concern linked to illicit Russian financing. Transactions with Bitzlato have been prohibited by the U.S. government.Hydra Market counterpartyThe Department of Justice (DOJ) separately accused Bitzlato of facilitating money laundering and other crimes, alleging involvement in laundering $700 million connected to the now-defunct Russian darknet market, Hydra Market.The DOJ&#39;s United States Attorney Breon Peace characterized Bitzlato as an &#34;open turnstile by criminals,&#34; while the exchange was deemed a &#34;crucial financial resource&#34; for Hydra Market, enabling the laundering of funds, including those from ransomware attacks.Registered in Hong Kong, Bitzlato served as the largest counterparty in cryptocurrency transactions for Hydra Market, a darknet marketplace for narcotics and illicit drugs. In April 2022, U.S. and German authorities jointly shut down the illicit marketplace.The legal troubles extend to company executives, with Bitzlato founder Anatoly Legkodymov <a href="https://coinnesslive.page.link/8zmzyK4GoT1Tt23y8" rel="noopener noreferrer nofollow">pleading guilty</a> to charges related to the illicit transfer of funds in the U.S. on Dec. 6. Legkodymov agreed to forfeit $23 million to prosecutors and faces a potential prison sentence of up to five years. He is currently imprisoned at the Metropolitan Detention Center (MDC) in Brooklyn, New York. European authorities also arrested senior management linked to Bitzlato in January 2023. The exchange&#39;s precarious situation highlights the challenges faced by cryptocurrency platforms amidst regulatory scrutiny and legal actions.The MDC facility also currently holds John Karony, the CEO of crypto company Safemoon and convicted fraudster and former FTX founder, Sam Bankman-Fried. The Department of Justice found itself the subject of major criticism on Friday, when it <a href="https://www.cnbc.com/2023/12/29/prosecutors-say-they-will-not-pursue-second-bankman-fried-trial.html" rel="noopener noreferrer nofollow">emerged</a> that it had informed the court that it would not be pursuing a second trial against Bankman-Fried.A second trial would have centered upon campaign financing offenses. It would have likely implicated Bankman-Fried’s parents. According to federal prosecutors, the disgraced FTX CEO donated customer funds to the tune of $100 million to U.S. politicians. It’s unclear which of these politicians, if any, has returned the money, with critics alleging corruption.

Bitzlato temporarily suspends withdrawal amid ongoing legal battle

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