Russia-linked crypto exchange Bitzlato has granted users permission to withdraw up to half of their frozen bitcoin funds after being officially seized by European authorities two months ago.
On March 20, Bitzlato informed its users via its Telegram channel that they could now withdraw up to 50% of their assets stuck on the exchange. This move comes from enforcement actions by both the United States and Europol.
When Bitzlato shut down on January 18, it converted all user altcoin holdings to Bitcoin, now the only currency processed for withdrawals. The firm cited technical difficulties in servicing multiple altcoins as the reason for this conversion following the seizure.
Bitzlato users can regain half of their assets through the Telegram bot, bz_phoenix_bot. This bot enables them to transfer assets from their Bitzlato account to an external wallet or exchange.
To start the withdrawal process, users must provide their Bitzlato-associated email address via the Telegram bot, verify their identity, and receive a code to complete the transfer. The minimum withdrawal amount for accessing frozen funds is 0.001 Bitcoin.
The exchange also encouraged clients to click the “Support Bitzlato” button while using this feature, stating that it could aid in “restoring justice” and potentially grant access to the remaining 50% of their assets.
Bitzlato Link With Hydra Market And User Sentiments
Bitzlato made headlines in January when the US DOJ, backed by Europol, halted its operations. Officials charged the platform as a hub for criminal activity, processing more than $700 million in illicit transactions.
Sources suggest that the Russia-linked Bitzlato helped significant illegal cryptocurrency transactions for Hydra Market users, a Dark Web marketplace involved in drug trafficking, money laundering, and other criminal activities.
Founder Anatoly Legkodymov faced accusations of managing an unlicensed money-transmitting business, with prosecutors arguing that the exchange failed to take necessary anti-money laundering measures and required minimal customer authorization.
US attorney Breon Peace from Brooklyn claimed that Bitzlato became a haven for criminals such as drug dealers and ransomware groups, knowing that the platform would not reveal their true identities when police traced their funds.
Many users have successfully withdrawn their holdings, moving their assets to other exchanges such as Bybit. However, some prefer to keep their funds on Bitzlato, hoping the exchange offers a peer-to-peer (P2P) crypto trading service by April 2023.
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A recent survey of nearly 3,300 respondents in Bitzlato’s Telegram news channel revealed that 30% of users had withdrawn funds without issue, while 4% still had blocked funds.