Drum roll. Worries. Panic. The US Department of Justice announced a “major international action to prosecute cryptocurrencies” on Wednesday, January 18, 2023. And it triggered a wave of speculation on crypto-Twitter: Are stablecoins now going to be banned? Harder regulation? Could it be Binance, the world’s largest crypto exchange? According to Reuters, the SEC has been investigating money laundering for months. An earthquake is expected. Bitcoin price falls for the first time after the announcement after the first positive weekly rally in months.
The announcement comes at 6 p.m. – and reaps: mockery and memes. Anatoly Legkodymov, the founder of Russian crypto exchange Bitzlato based in China, was arrested in Miami. She is said to have laundered over $700 million, most of it on the Russian dark web, on the Hydra trading platform. The assets are confiscated, the website goes offline. Deputy Attorney General Lisa Monaco of the Department of Justice, the United States Deputy Attorney General, states: “Today, the Department of Justice dealt a major blow to the cryptocrime ecosystem.” Crypto Twitter sees it differently.
Mockery and memes for Bitzlato
The Crypto Advisor Hailey Lennon tweets: “I’ve been working in this industry since 2013 and I’ve never heard of it.” The well-known Web3 skeptic Molly White also expresses posts a meme, among other thingsto show their glee. Ryan Selkis, the founder of Messari, one of the largest crypto data platforms, follows up: “Bitzlato lol. Our tax dollars are being wasted.” A popular meme circulating on social media about the case also shows how unimpressed the crypto scene is by this punitive action. It shows Bitzlato as a feather aiming at a soldier while knives and missiles labeled BlockFi, Voyager, Celsius, and FTX rain down on a sleeping civilian:
“A very low hanging fruit sold as a big catch. It’s not,” Joseph Collement, general counsel at Bitcoin.com, told The Block. “The real crime is that the DOJ is not protecting Americans from FTX, Voyager, 3AC, Genesis and the many other insolvent centralized exchanges.”
Bitzlato is probably just the beginning of actions from US Department of Justice
But a closer look reveals that this campaign is not that small. After all, 700 million US dollars were laundered via the platform, much of it associated with sanctioned Russian entities and “known crooks”, according to the US judiciary. “Approximately two-thirds of Bitzlato’s major receiving and sending counterparties are associated with dark web markets or scams,” it said. Particularly explosive: One of the largest recipients of bitcoin through Bitzlato was Binance. The blow to the stock market is also likely to bring other implications to light.
And it could be just the beginning of much larger advances. At least that’s how Van Cleef, Luminous Group’s chief counsel, sees it. “Disappointed in Bi…zlato? Don’t be. A much larger message was conveyed – a blueprint for future actions, perhaps even the ones everyone expected today.”
Disappointed by Bi…zlato? Don't be – a much broader message was delivered — the blueprint for future actions, possibly even the one highly anticipated today. 2/8
— Carol Van Cleef (@Carol_VanCleef) January 18, 2023
The US Department of Justice also stated that this is “just the beginning” in cracking down on crypto firms involved in money laundering and other criminal activities.