WASHINGTON, Jan 18 (Reuters) - U.S. authorities said on Wednesday they have arrested the majority shareholder and cofounder of Hong Kong-registered virtual currency exchange Bitzlato Ltd for allegedly processing $700 million in illicit funds. It also broke rules requiring significant vetting of customers and failed to meet requirements aimed at preventing money laundering, authorities said. REUTERS/Dado Ruvic/Illustration 1 2Prosecutors said Bitzlato knowingly serviced U.S. customers and conducted transactions with U.S.-based exchanges using U.S. online infrastructure. "Identifying Bitzlato as a primary money laundering concern effectively renders the exchange an international pariah," Deputy Treasury Secretary Wally Adeyemo said at the news conference. "None of the mainstream financial institutions will deal with an entity identified as a primary money laundering concern," she said.

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