Spanish authorities have arrested the CEO of Hong Kong cryptocurrency exchange Bitzlato, as well a sales executive and its marketing director.
It has been reported that in total, six Russian and Ukrainian nationals related to the exchange were arrested in a joint effort between France, Portugal, Cyprus, and United States law enforcement.
However, according to Spanish police, the exchange’s anonymity allowed it to become the platform of choice for criminal organizations seeking to launder money via cryptocurrency. Authorities seized 18 million euros ($19.8 million) in digital assets, luxury cars, cash, smartphones and other items related to the investigation and blocked over 100 exchange accounts.
The report said that the move comes just two days after co-founder Anton Shkurenko stated in an interview that 50% of the Bitcoin held in Bitzlato wallets could be withdrawn when the exchange relaunches, after investigators seized approximately 35% of users’ funds held in the exchange’s hot wallets. Regarding this, Shkruenko said that the new Bitzlato will be based in Russia and “out of reach of law enforcement authorities.”
On January 18, the US Department of Justice announced an enforcement action against Bitzlato, alleging that a lack of Know Your Customer and Anti-Money Laundering compliance helped cybercriminals launder over $700 million via the Bitzlato exchange.
Thus, the same day, Bitzlato websites were shut down, with a portion of exchange funds seized by police. Its co-founder, Anatoly Legkodymov, a Russian national and resident of China, was arrested in Miami around the same day.