BINANCE Holdings, the world’s largest crypto exchange, was named among the key counterparties to digital-asset platform Bitzlato, which has been accused of processing millions of dollars in illegal funds.

Bitzlato’s Russian founder Anatoly Legkodymov was arrested on Tuesday (Jan 17) in Miami on charges alleging the masking of proceeds from illegal gambling and drug deals valued at more than US$700 million.

Binance “provided substantial assistance to international law enforcement partners in support of this investigation”, a Binance spokesperson wrote in a statement. “This exemplifies Binance’s commitment to working collaboratively with law enforcement partners worldwide,” the spokesperson added.

The Financial Crimes Enforcement Network of the Department of the Treasury wrote in an order that “approximately two-thirds of Bitzlato’s top receiving and sending counterparties are associated with darknet markets or scams”.

It named Binance as the top receiving counterparty by total amount of Bitcoin between May 2018 and September 2022, according to the document. Hydra — a Russia-connected dark net web market — and TheFiniko — a Russia-based scheme — were listed as second and third.

The top three sending counterparties during the same period were Hydra, Local Bitcoins in Finland and TheFiniko, the Treasury Department document showed.

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Bitzlato, a Hong Kong registered entity, has “significant ties to and connections with Russia”, it said, adding that the exchange is a “financial institution of primary money laundering concern in connection with Russian illicit finance”.

Local Bitcoins didn’t immediately reply to an email for comment sent outside regular business hours. There was also no immediate reply to an email sent outside regular business hours to an address on what appeared to be TheFiniko’s website. BLOOMBERG