Why Did Bitzlato Shut Down? Seizures and Customer Funds
Bitzlato’s takedown, its founder’s guilty plea, partial withdrawals and later French proceedings: what the record establishes about the exchange’s exit.
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Bitzlato’s infrastructure was dismantled in an international enforcement operation announced on 18 January 2023. Its founder and majority owner, Anatoly Legkodymov, had been arrested in Miami.
On 6 December 2023, he pleaded guilty to operating a money transmitting business that transmitted illicit funds. He agreed to dissolve Bitzlato and relinquish claims to approximately US$23 million in seized exchange assets.
The guilty plea established a criminal outcome for the founder. It did not settle when every customer would regain access to their balance.
Why authorities shut Bitzlato down
US prosecutors described Bitzlato as a Hong Kong-registered exchange operating globally. Their January 2023 complaint announcement alleged deficient customer-identification controls and extensive dealings with illicit counterparties.
The Department of Justice said French authorities, working with Europol and partners in other countries, dismantled the digital infrastructure. The criminal charges announced that day were allegations; the founder’s later guilty plea must be dated separately.
FinCEN took a parallel regulatory step. Its 18 January order identified Bitzlato as a primary money laundering concern connected to Russian illicit finance. It prohibited covered financial institutions from making certain transfers involving Bitzlato, effective 1 February 2023.
The order was a financial restriction, not a customer compensation scheme.
That combination makes Bitzlato different from an exchange leaving a market for commercial reasons. The record of exchange closures separates enforcement takedowns from voluntary wind-downs, insolvencies and customer-asset transfers.
See other closed crypto exchanges and the record behind each exit.
What the headline figures actually measure
The DOJ’s guilty-plea announcement said Hydra Market users exchanged more than US$700 million in cryptocurrency with Bitzlato, directly or through intermediaries, before Hydra’s April 2022 shutdown.
That figure describes transaction value associated with those counterparties. It is not a count of users, a balance available for refunds or the amount every customer lost.
| Figure | Source and date | What it describes |
|---|---|---|
| More than US$700 million | DOJ, December 2023 | Cryptocurrency exchanged with Hydra users, directly or through intermediaries |
| Approximately US$23 million | DOJ, December 2023 | Seized Bitzlato assets over which the founder agreed to relinquish claims |
| About €18 million | Europol, January 2023 | Cryptocurrency wallets seized, valued at the time of the announcement |
Europol reported the euro-denominated seizure figure on 23 January 2023. These measures have different dates, currencies and scopes. They should not be added together or divided to manufacture a recovery percentage.
Nor does the founder’s conviction establish that every person who used Bitzlato committed a crime.
Partial withdrawals followed the takedown
Customer access did not follow one uninterrupted shutdown schedule.
ForkLog’s December 2023 account of the withdrawal process dates partial Bitcoin withdrawals to 20 March 2023. It reports that the withdrawal limit rose to 60% on 14 September.
On 27 December, however, the team announced another suspension of special-balance withdrawals and customer support. It described the pause as temporary and linked it to forthcoming hearings concerning assets seized in France.
That was an operator statement reported in 2023. It is not an independently audited finding that every customer recovered 70%, or evidence of a withdrawal entitlement available today.
These partial-access arrangements should also not be described as proof that ordinary exchange trading had resumed.
The founder’s sentence did not end every proceeding
Legkodymov was sentenced on 18 July 2024 to time served and two years of supervised release, as recounted in a later federal court filing.
Separate French proceedings continued. On 23 September 2025, a US magistrate judge certified him as extraditable to France, finding probable cause for the offenses considered.
The opinion expressly distinguished that threshold from a finding of guilt. Certification also was not, by itself, proof that he had been surrendered to France.
Legkodymov challenged the certification through a habeas corpus petition. In a report dated 15 June 2026, Magistrate Judge Jennifer Dowdell Armstrong recommended denying that petition.
A recommendation is not the district judge’s final decision. This review did not verify a later final disposition of that challenge. None of these documents announces a general customer distribution timetable.
What can former customers rely on now?
As of 16 October 2026, this review did not locate a verified current withdrawal window, a general customer claims portal or a receiving provider authorised to take over all Bitzlato balances.
The last withdrawal development established here is the December 2023 suspension. Describing it as temporary at the time did not guarantee a reopening date.
A seizure, forfeiture and customer repayment are separate events. The US plea agreement’s reference to seized assets should not be converted into an instruction to claim a share through an unsolicited website.
Former customers should retain account identifiers, balance records, deposit transaction IDs, withdrawal confirmations and correspondence about special balances. Any later notice needs to identify the responsible authority or operator, the relevant assets and the basis on which a particular customer can participate.
The FTC warns that unsolicited recovery offers requiring upfront payments can lead to further losses. A demand for a release fee does not prove that the sender controls seized funds.
The distinction for people choosing an exchange
FinCEN’s account of Bitzlato’s controls found that it had taken few meaningful steps to identify and disrupt illicit activity. Minimal identity checks were part of the authorities’ case, not simply a convenience feature.
Choosing where to buy crypto also means assessing the operator’s identity checks, legal entity and custody arrangements. Finlazo cannot release Bitzlato balances or recover assets held in these proceedings.
Other exits involved different mechanisms. DMM Bitcoin arranged a customer transfer, while LocalMonero and AgoraDesk announced a joint wind-down. Their customer arrangements cannot be applied to Bitzlato.
Information checked on 16 October 2026. Historical withdrawal percentages are attributed to contemporaneous reporting. The June 2026 court document is a report and recommendation, not a verified final resolution or customer recovery order.
