Wednesday, the u.s. department of justice announced an “international cryptocurrency enforcement action” targeting a hong kong-based, russian-owned cryptocurrency exchange called bitzlato. the doj’s action was declared as a “significant blow to the cryptocrime ecosystem” by deputy attorney general lisa monaco, as bitzlato allegedly processed more than $700 million in illicit funds, including millions in proceeds from ransomware. the securities and exchange commission (sec) also took action last week, charging both genesis and gemini for violating securities laws.
Doj’s action against bitzlato took place on january 18, when bitzlato customer wallets only held roughly $11,000. at its peak, bitzlato’s customer wallets held a maximum of $6 million. the crypto market swiftly recovered after the doj’s announcement. the doj has been looking into binance since 2018 and is reportedly undecided on whether to bring charges.
Action against bitzlato was taken to disrupt the cryptocrime ecosystem and protect investors from illicit activities. people in the crypto community often have an irrational view of the very word ‘regulation’. the ftx meltdown has created a new atmosphere in which regulators and politicians feel pressured to prove their earnestness in ridding the crypto space of bad actors. this could lead to overreach, as was seen last year with the action taken against tornado cash. the hype could be on a much larger enforcement action in the near future. there have been rumors that the doj is investigating digital currency group, the owner of crypto lender genesis, which filed for bankruptcy this week.