The Crypto Community Almost Lost Its Mind Today

Department of Justice announcement caused chaos… for no reason at all

 

A real nail-biting experience

The crypto community was thrown into a frenzy on Wednesday when the Department of Justice (DOJ) announced a press conference concerning a “major international cryptocurrency action.” In anticipation of the announcement, Bitcoin dropped 4.6% and Ethereum shed 5%. Many in the crypto market feared that another major player, like FTX, would be targeted by federal prosecutors.

However, when the announcement was made, it was revealed that the DOJ was targeting Bitzlato, a Hong Kong-based crypto exchange. The exchange’s founder, Russian national Anatoly Legkodymov, also known as “Gandalf,” was arrested for allegedly failing to establish anti-money laundering requirements for Bitzlato. The exchange is believed to have processed $700 million in illicit funds, primarily from transactions related to the dark web marketplace Hydra.

Say Who now??

While the DOJ touted the arrest as a significant blow to the “cryptocrime ecosystem,” many in the crypto community were left scratching their heads as few had ever heard of Bitzlato. In terms of size, the Chinese exchange held a maximum of $6 million in funds at its peak, according to analytics firm Arkham.

The community took to Twitter to lambast the DOJ for unnecessarily causing market panic and for targeting a relatively small player in the crypto market. Prior to the announcement, many speculated that the DOJ would be targeting Binance, the world’s largest crypto exchange, which has been under investigation for four years. Binance had been closely tied to the collapse of rival firm FTX and had recently admitted to unorthodox business practices.

 

This event highlights the ongoing challenges and uncertainty that government agencies face when trying to regulate the crypto market. The market is constantly evolving and it is difficult for regulators to keep pace with the latest developments. This has led to a patchwork of regulations across the globe and a lack of consistency in how the crypto market is regulated.

While the DOJ’s action may have been a disappointment for many in the crypto community, it is clear that government agencies are taking the issue of crypto regulation seriously and are looking for ways to combat illegal activities in the crypto market. It remains to be seen how the situation with Bitzlato will unfold and what impact it will have on the crypto market.

Binance has been under investigation

Binance has been under investigation by federal prosecutors for the past four years. The exchange had been deeply entangled in the collapse of rival firm FTX, and recently admitted to some unorthodox business practices. This has led to concerns about the exchange’s compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations.

 

The investigation into Binance has been part of a larger effort by the American government to crack down on illegal activities in the cryptocurrency market. The government is particularly concerned about the use of crypto in money laundering and other illicit activities. In recent years, it has been reported that Binance has been used to launder hundreds of millions of dollars.

The government has also been concerned about Binance’s lack of transparency and its ability to evade regulatory oversight. The exchange has been accused of operating in a gray area, and of not fully cooperating with regulatory authorities. This has led to calls for stricter regulations on crypto exchanges, particularly those operating in the United States.

The speculation that the DOJ would target Binance in its announcement highlights the ongoing challenges that the government faces when trying to regulate the crypto market. The market is constantly evolving, and it is difficult for regulators to keep pace with the latest developments. This has led to a patchwork of regulations across the globe and a lack of consistency in how the crypto market is regulated.

 

 
 
 

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