An announcement was made by the U.S. Department of Justice (DOJ). Though, the news was not as big of a deal as they made it out to be.
In the beginning, the announcement by DOJ had an impact on people.
This is due to the latest happenings in the crypto world, like the crypto conglomerate – Digital Currency Group – being destabilized.
Then there is the news regarding the interrogation of Binance, as well as one of the largest crypto exchange, FTX, going bankrupt.
Due to the announcement, the ether (ETH) and bitcoin (BTC) cryptocurrencies fell by approximately 5%.
The announcement of Bitzlato being shut down and the owner getting arrested was not considered to be a big deal.
It was seen to be more of a waste of time and money. Now, this was because generally, people do not have an idea about Bitzlato.
Even the authoritative figures made the mistake of spelling the cryptocurrency exchange’s name incorrectly when sharing the documents.
Bennett Tomlin, a crypto critic, and a researcher also commented on Bitzlato. He stated that it seems that even the authorities have heard the name of the exchange for the first time as well.
Information about Bitzlato
It is a crypto exchange officially listed in the city of Hong Kong. The owner is Anatoly Legkodymov, a Russian citizen, also known as Gandalf.
As per the accusation, the transaction made was of cryptocurrency worth $4.5 billion, out of which $700 million was transmitted via the dark-net marketplace – Hydra.
This is where illegally goods and services are traded. In addition to it, it was noticed that quite a significant amount was received from American nationals.
This, in turn, meant that it would be handled by the “U.S. regulatory controls.”
Moreover, it was witnessed that the cryptocurrency exchange, Bitzlato, laundered money illegally, along with drug trafficking.
This was seen after the interrogation was made by the FBI, quite a few of European agencies, and the DOJ.
The owner, Legkodymov, was fully aware of the illicit occurrences. He even spread the word about it amongst people.
He will likely be experiencing an estimated sentence of five years, if he was for sure running his business illicitly.
Although, there is a reason as to why a few people were aware about Bitzlato and its owner before all of this happened.
It was because of the Senate Majority Leader – Sen. Chuck Schumer. He shifted the attention of masses to bitcoin and the dark-net market, after discussing the closure of it.
However, this does not imply that Bitzlato was not the very core of cryptocurrency crimes with very high tech. The FBI has claimed that the machine used for the purpose of money laundering was based in China.
Technically, transactions on the dark net are to be done in a discreet manner.
Though, considering its popularity, it definitely had a tiny sum of amount that is crypto worth $6 million in funds. Also, researchers have noticed that the site had very less traffic.
Why does the news about Bitzlato hold such significance?
After it happened, people questioned why such a big deal was created. Especially when it can be handled by the police. This matter was addressed by Deputy Attorney General Monaco.
Monaco made it clear that no matter where an illicit business is being run from if it reaches the US, it will be dragged to the US courtrooms. It implies that the police have authority to an extent.
But, since the cryptocurrency business takes part largely in a global sphere, the interrogation-related world will be handled by the United States.
This should not come off as a surprise though.
Even before this took place, they have caught and dealt with several companies offshore. That too multiple times.
Even then it is quite of a bold statement to make. It might even make the owner of Binance – Changpeng Zhao – nervous.
This is because Binance is a competitor of Bitzlato, alongside Finiko and Hydra.
As per Protos, a news website, Hydra is responsible for Bitzlato’s initiation of the interrogation because the former captured the latter’s documents last year.
Due to this, the DOJ has begun to invest in both Hydra and Binance, considering the similarities they share with each other.
In the year 2021, Antoinette Schoar and Igor Makarov noticed that one of the largest source of Hydra’s volumes was Bitzlato, then Binance, etc.
Although Binance is not being pinpointed here, within the last few years, it has shown off its operations. So, Binance is not off the hook because of its known money laundering activities.
This is why the interest of the Securities and Exchange Commission has been piqued beyond measure, as per CoinDesk.
And if Hydra is called out too, because of everything that is going on, it should not come as a surprise to the masses. The conviction from yesterday served to highlight a significant fact.
Now the authorities, like the police, have the means to look into and bring charges against alleged cryptocurrency offenders.
Because of this, lawmakers have begun to make severe rules. Especially after everything that went down with FTX and other fiascos.
Apparently, in the year 2021, the first case of the Justice Department’s crypto-based NCET team was about Bitzlato.
This news was spread by the Washington Post.
It gave a chance to the Financial Crimes Enforcement Network of the U.S. Treasury Department the to introduce new powers in 2021.
This was done so it could prosecute the financial crimes related to Russia, including avoiding slower methods to impose penalties by decree.
There is a case to be made that the regulation of money transfers is already extremely wide.
It disincentives the people, especially by putting emphasis on the assumption that monitoring for security purposes is commonplace.
Regardless of it becoming clear that platforms, like blockchain, to conduct illegal business are public and transparent, people still take part in them.
This means that both the crimes and the laws will continue to exist.
Hence, it is a big reason why yesterday’s press conference was deemed embarrassing.
When considering the jurisdiction for U.S. agencies to prosecute offences, Monaco’s reference to the FTX market highlights how frequently authorities miss to foresee things.
Even though Bitzlato was an example, it is comparatively insignificant.