The Department Of Justice Is Flexing It’s Muscle On Crypto, But Maybe It Should Hit The Gym First

The DOJ is serious about Crypto regulation, or at least that is what they want you to think.

DOJ on the warpath

The recent news of the DOJ’s actions against a lesser-known crypto entity came as a shock to many in Crypto Twitter, with some users expressing concern that this could be a sign of more stringent regulations on cryptocurrencies in the future. These fears were compounded by a drop in Bitcoin and Ethereum prices following the announcement, which is believed to have been influenced by worries over increased government regulation.

This announcement from the DOJ follows an incident involving another cryptocurrency trading platform, FTX, which experienced a technical breakdown due to high volumes earlier this month. This incident has caused global regulators, including the US Department of Justice, to increase their focus on crypto-related endeavors and take steps toward demonstrating their authority in this area.

Ramping up Efforts

The United States government has been ramping up its efforts to crack down on crypto-related crimes. Recently, the U.S. Department of Justice (DOJ) announced that it would be holding a live press conference to unveil an “International Cryptocurrency Enforcement Action.” The crypto community panicked and prices of Bitcoin and Ethereum fell nearly 5% in a matter of minutes. There were speculations that it could be a big player like Binance, but it turned out to be a Hong Kong-based, Russian-owned crypto exchange called Bitzlato.

Bitzlato??

Bitzlato allegedly processed more than $700 million in illicit funds, including proceeds from ransomware. However, the reality of the situation is that Bitzlato’s customer wallets held only $11,000 as of January 18th. Despite this, the DOJ’s Deputy Attorney General, Lisa Monaco, touted the enforcement action as a “significant blow to the cryptocrime ecosystem” and “fueled a high-tech axis of cryptocrime.”

The U.S. government is attempting to demonstrate that it is aware of crypto crimes and is taking action. The DOJ has been investigating Binance since 2018, and it is rumored that they are also investigating Digital Currency Group, the owner of crypto lender Genesis, which recently filed for bankruptcy. The Securities and Exchange Commission (SEC) also charged both Genesis and Gemini for violating securities laws.

The recent collapse of FTX and the increased scrutiny of crypto crimes has led to more posturing by the government. SEC Commissioner Hester Peirce has expressed her concerns that the government may overreact and create hasty restrictions on crypto. She believes that regulations should be created in a way that protects retail investors, rather than shutting down the industry entirely.

The recent actions taken by the government have created a climate where regulators and politicians are feeling more pressure than ever to show that they are serious about eliminating bad actors in the crypto industry. This could lead to overreach and the next big enforcement action may not be against a small-time player. It is important for the government to strike a balance between protecting investors and not stifling innovation and growth in the crypto industry.

 

The crackdown on crypto crimes by the US government is a reflection of the growing importance and mainstream adoption of digital currencies. The increasing interest in Bitcoin and other cryptocurrencies, as well as the rising number of crypto exchanges, has made it necessary for the government to take action and ensure the safety of investors.

The Bitzlato case is a prime example of how the government is taking action to eliminate bad actors in the crypto industry. The fact that the exchange was processing illicit funds and was involved in ransomware activities poses a risk to investors and the integrity of the crypto market. The government’s action in this case sends a message to other crypto exchanges and actors that such activities will not be tolerated.

A more nuanced approach needed

The Department of Justice (DOJ) is flexing its muscles in regard to cryptocurrency as it seeks to raise awareness of its ability to bring charges related to crypto crime. The DOJ has long been investigating Binance since 2018 and there has been recent speculation that Digital Currency Group, owner of crypto lender Genesis, is also under scrutiny. This is part of a wider trend set by the SEC to take action against both Genesis and Gemini for breaking securities laws last week. While the news seemed almost comical to some people entrenched within the crypto world, those further outside the community took it with more gravity, gaining clarity that the US government is actively involved in crackdowns on criminal activity involving cryptocurrency.

However, the government’s approach to crypto regulation should be measured and well thought out. It is important to strike a balance between protecting investors and promoting innovation and growth in the crypto industry. Hasty restrictions and overregulation can stifle the growth of the crypto market and hinder its potential to revolutionize the financial industry. The attack on Bitzlato by the government was seen as weak and not well thought out with many making multiple jokes about the situation.

It is also important to note that not all crypto-related activities are illegal or pose a risk to investors. The government should focus on targeting illegal activities, such as money laundering and fraud, rather than penalizing legitimate crypto businesses and investors.

The US government’s crackdown on crypto crimes is indeed a necessary step to ensure the safety of investors and the integrity of the crypto market. However, it is important for the government to take a measured approach and not stifle innovation and growth in the crypto industry. The crypto market has the potential to revolutionize the financial industry, and it is important for the government to support its growth while protecting investors from illegal activities.

 

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