Hong Kong-based cryptocurrency exchange Bitzlato has halted withdrawals in preparation for upcoming court proceedings related to the confiscation of its user assets in France.
According to a message sent to users via Telegram, the withdrawal and technical support suspension will be temporary as the team is optimistic about the court case.
Bitzlato Temporarily Suspends Withdrawals
Bitzlato’s temporary withdrawal suspension comes a few weeks after its co-founder, Anatoly Legkodymov, pleaded guilty to money laundering charges in New York and agreed to shut down the exchange.
The U.S. Department of Justice (DOJ) arrested Legkodymov in January after issuing an international crypto enforcement action in a joint operation with the Treasury Department and European law enforcement agencies.
The Bitzlato founder was deemed responsible for transmitting over $700 million in illicit funds from criminals attracted to the exchange due to its minimal requirements for user-identifying information. The crypto platform was also a major service provider for darknet market participants and ransomware criminals.
Besides Legkodymov, European law enforcement agencies apprehended other Bitzlato key figures like former CEO Mikhail Lunev, contractor Pavel Lerner, an undisclosed dev-ops engineer, and marketing director Alexander Goncharenko.
A Not So Bad Year
While the DOJ shut down Bitzlato’s operations and froze its assets after Legkodymov’s arrest, the exchange’s team granted users partial access to their holdings in March. The team had converted its total altcoin holdings to bitcoin (BTC) and allowed customers to withdraw up to 50% of their funds to other exchanges or external wallets using a Telegram bot.
Although some users withdrew their assets, others left their funds on Bitzlato, hoping the exchange would launch a peer-to-peer (P2P) trading service in April. With the latest development, it remains unclear when customers will be able to access their balances.
“At the moment, 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. We are determined and optimistic about this issue,” the Bitzlato team said.
Meanwhile, the Bitzlato team said 2023 was “not so bad” as the exchange was able to close 70% of the balance it had when U.S. authorities stopped its services.
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