An operation led by French and U.S. authorities, and strongly supported by Europol, has targeted the crypto exchange platform Bitzlato. The globally operating Hong Kong-registered cryptocurrency exchange is suspected of facilitating the laundering of large amounts of criminal proceeds and converting them into roubles.
The operation also involved law enforcement and judicial authorities from Belgium, Cyprus, Portugal, Spain and the Netherlands. Law enforcement authorities took down the digital infrastructure of the service, based in France, and interrogated leading members of the platform’s management. Five individuals have been arrested so far (in Cyprus, Spain and the U.S.). The action follows the January 18 arrest of Bitzlato’s founder in the U.S.
Targeting crucial crime facilitators such as crypto exchanges is becoming a key priority in the battle against cybercrime. Bitzlato allowed the rapid conversion of various crypto-assets such as bitcoin, ethereum, litecoin, bitcoin cash, dash, dogecoin and USDT into Russian rubles. It is estimated that the crypto exchange platform has received a total of assets worth EUR 2.1 billion (BTC 119,000).
While the conversion of crypto-assets into fiat currencies is not illegal, investigations into the cybercriminal operators indicated that large volumes of criminal assets were going through the platform. The analysis indicated that about 46% of the assets exchanged through Bitzlato, worth roughly EUR 1 billion, had links to criminal activities. Europol says that already over 3,500 bitcoin addresses and over a 1000 Bitzlato user details showed links with various criminal cases reported in Europol’s systems. Analysis of this data and other related cases is expected to trigger further investigative activities.
Cryptanalysis uncovered that the majority of suspicious transactions are linked to entities sanctioned by the Office of Foreign Assets Control (OFAC), with others linked to cyber scams, money laundering, ransomware and child abuse material. For example, investigations showed that 1.5 million BTC transactions have been made directly between Bitzlato users and the Hydramarket, taken down in April 2022.
This exchange platform, available both in Russian and English language, rented dedicated servers from a hosting company in France. The coordinated action of the judicial and law enforcement authorities from the different involved countries led to the takedown of the platform, seizures of present financial assets, and further technical analysis.