Despite being formally seized by European authorities, Bitzlato, a Russian-based cryptocurrency exchange, has largely restored user access to money.
In response to US and Europol enforcement actions, Bitzlato has made it possible for its customers to withdraw up to 50% of the assets that have been frozen on the platform, the exchange said on March 20 through its Telegram channel.
The bz_phoenix_bot Telegram bot, which enables users to transfer assets from the online Bitzlato account to an external wallet or exchange, is said to allow customers to now restore half of their holdings.
When the service was stopped on January 18, the platform changed all user cryptocurrency holdings into BTC. Therefore, all withdrawals from Bitzlato are handled in BTC. The company claims that after the exchange was seized, technological issues with supporting various cryptocurrencies forced Bitzlato to transfer customer balances to Bitcoin.
Several purported members of the exchange claimed they were able to transfer their Bitcoin to exchanges, including ByBit and Binance, in a public Bitzlato statement. Additionally, it has been claimed that some Bitzlato users withdrew their Bitcoin using hardware wallets like the Ledger as well as software wallets like Trust Wallet and ViaBTC.
Following its previously declared timeline for restarting operations and restoring users’ access to the site, Bitzlato now offers a 50% withdrawal option. The proposal states that the exchange will continue to work on restoring the platform and hopes to offer a peer-to-peer (P2P) cryptocurrency trading service by the beginning of April 2023.
Many users would rather wait until the exchange resumes P2P trading than withdraw 50% of their Bitzlato assets. Users will be able to utilize all previously accessible features once the P2P platform has been restored, according to a Bitzlato spokesperson.
When the P2P exchange launches, Bitzlato customers shouldn’t count on getting back the other 50% of their holdings, the spokesman warned.
“There will be no second half once the P2P is opened since these are two unrelated questions and processes,” the spokesperson added.
The spokesperson claims that although the problem with the client funds has not yet been resolved, Bitzlato intends to refund the money by regaining access to funds that Europol has frozen or used business funds. The representative stated:
“Lawyers have disputed the decision of the French government, and if the outcome is favorable, the funds will be returned […] If it does not work out, the users have to wait until the firm earns enough to compensate for the losses.”
As was previously mentioned, in the middle of January, the US Department of Justice launched a significant global crypto enforcement action against Bitzlato. Later, according to Europol, as part of the enforcement activities, European officials confiscated more than $19 million in cryptocurrency from the exchange.