Cryptocurrency exchange Binance has been silently shutting down multiple accounts on the platform in relation to the Bitzlato investigation.
On Jan. 18, a group of Russian-speaking Binance clients complained about blocked accounts and not being able to withdraw their funds from the exchange. The affected users created a Telegram group chat to report the issues, stating that the accounts were blocked without a warning.
The members of the group — now counting more than 1,000 — promptly drew parallels between the blockages and enforcement action against the crypto firm Bitzlato by the United States Department of Justice. The U.S. Financial Crimes Enforcement Network also listed Binance among the top Bitcoin (BTC) counterparties of Bitzlato.
Many chat members have openly admitted to using Bitzlato, including incoming and outgoing transactions between Bitzlato and Binance accounts. Some affected users also expressed outrage and confusion about the action against Bitzlato.
“Though I haven’t been banned anywhere yet, I just lost some on BTC-e, Wex, now it’s Bitzlato, but I consider these bans to be lawlessness,” one chat member wrote.
“Blockages in relation to Bitzlato are nonsense. They haven’t been proven guilty so far as there are only accusations, so how can this money be dirty?” another user asked.
A spokesperson for Binance told Cointelegraph that the recent suspensions were indeed connected to Bitzlato. “Last week, our compliance and investigations team, in relation to the Bitzlato case, suspended some users’ accounts from several countries, including in Eastern Europe and the CIS,” the representative stated.
Binance’s spokesperson emphasized that the majority of the suspensions were temporary, stating:
“At the moment, more than 90% of the accounts have been unlocked, users have been notified about this. All funds are safe. Affected users — less than 20 — have been provided with relevant law enforcement contact information.”
The crypto exchange also advised users to look at Binance’s article on multiple reasons their Binance account might be blocked and what to do in such a situation.
As previously reported, Bitzlato was a little-known cryptocurrency service allowing users to trade crypto via an exchange and peer-to-peer services. The platform is known to maintain significant operations in Russia, allegedly operating from the Federation Tower skyscraper in Moscow.
According to allegations by the U.S. government, Bitzlato ran its operations without proper Know Your Customer procedures, which helped it become a “haven” for criminal proceeds and funds intended for use in criminal activity.”