Cryptocurrency exchange Binance has been quietly shutting down multiple accounts on the platform in connection with the Bitzlato investigation, according to multiple users.
On January 18, a group of Russian-speaking Binance clients complained that their accounts were locked and that they were unable to withdraw their funds from the platform. Affected users created a group chat on Telegram to report the issues, claiming that the accounts had been banned without warning.
The members of the group – which already has more than 1,000 members – were quick to draw parallels between the blockades and the coercive measures against the cryptocurrency company Bitzlato by the United States Department of Justice. The US Financial Crimes Enforcement Network also listed Binance among Bitzlato’s top Bitcoin (BTC) counterparties.
Many chat members have openly admitted to using Bitzlato, including making inbound and outbound transactions between Bitzlato and Binance accounts. Some affected users also expressed outrage and confusion over the action against Bitzlato.
“Though I haven’t been banned anywhere yet, I just lost some on BTC-e, Wex, it’s Bitzlato now, but I consider these bans illegal,” wrote a member of the chat.
“The blocks in relation to Bitzlato are nonsense. So far his guilt has not been proven, there are only accusations, so how can such money be dirty?”, another user wondered.
A Binance spokesperson told Cointelegraph that the recent crashes were indeed related to Bitzlato. “Last week, our enforcement and investigations team, in connection with the Bitzlato case, suspended the accounts of some users from various countries, including those in Eastern Europe and the CIS,” stated the representative.
The Binance spokesperson stressed that most of the suspensions were temporary, stating:
“At the moment, more than 90% of the accounts have been unlocked, users have been notified about it. All funds are safe. Affected users – less than 20 – have been provided with the relevant contact information of the law enforcement.”
The exchange also advised users to take a look at Binance’s article on the many reasons why your account might be locked and what to do in such a situation.
As previously reported, Bitzlato was a little-known cryptocurrency service that allowed users to trade cryptocurrencies through an exchange and peer-to-peer services. The platform is known to maintain major operations in Russia, reportedly from Moscow’s Federation Tower skyscraper.
According to the US government’s accusations, Bitzlato ran its operations without proper “Know Your Customer” procedures, which contributed to it becoming a “haven for profits and funds from criminal activities.”
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