The United States Department of Justice announced a major enforcement action against Bitzlato and its founder Anatoly Legkodymov, who was arrested on Jan. 17th in Miami.
U.S. Deputy Attorney General Lisa Monaco said the enforcement action was taken in coordination with France. The goal was to seize as many resources as possible. The action was successful and authorities managed to seize Bitzalto's website and label it as a primary money laundering concern.
Crypto firm exchanged cryptocurrencies of Hydra Market users thus allowing them to launder $700 million worth of funds including those acquired through ransomware attacks, according to U.S. authorities.
Assistant Attorney General Kenneth Polite said this is the beginning of cracking down on similar firms involved in facilitating money laundering. Monaco warned against those committing crimes against the U.S. financial system “from a tropical island”.
Genesis filing for bankruptcy
Cryptocurrency lending firm Genesis, a subsidiary of DCG which is also a parent company of Grayscale Bitcoin Trust ($GBTC) could file for bankruptcy even before February.
On January 12th SEC (Securities and Exchange Commission) charged Genesis and Gemini for offering unregistered securities through the »Earn« program. The case is ongoing so we will have to wait for more info.
You probably already went through the Winklevoss open letters that were released through social media so you have a rough idea of what's happening.
Winklevoss twins are calling out Digital Currency Group CEO Barry Silbert. According to Gemini, Genesis owes $900 million for funds that were lent as a part of the »Earn« program. DCG responded and said the allegations were “malicious, fake, and defamatory attacks.”
Liquidity issues arose after the collapse of 3AC, which owed Genesis ≈$450 million. As if that wasn't enough Genesis also held ≈$175 million worth of funds on FTX prior to its bankruptcy filing. Recipe for a disaster.
This could be another black swan event that prevents the crypto market to flip bearish structures into bullish ones. It's also possible that bankruptcy filing is already priced in since we were »warned« about it.