The crypto market has been in an endless cycle of pain and whenever signs of relief surface, they seem to be nipped in the bud by forces of FUD. In this recent saga, Bitzlato is at the forefront of the FUD.
According to a recent Cointelegraph publication, Bitzlato, a crypto exchange that services customers across Europe is complicit in money laundering activities that sum upwards of $700m. Further details of the case show that the funds were connected to Russians and a darknet marketplace known as Hydra.
“Hydra Market users exchanged more than $700 million in cryptocurrency with Bitzlato, either directly or through intermediaries, until Hydra Market was shuttered by U.S. and German law enforcement in April 2022. Bitzlato also received more than $15 million in ransomware proceeds.”
The details of the case are still not completely out in the open but we know that Anatoly Legkodymov, the CEO of Bitzlalo, who is also of Russian descent, is scheduled to be arraigned for questioning and potential criminal charges. Naturally, there will be questions about any connections to the Surria-Ukraine situation and according to WSJ this is already being looked at by the Deputy Treasury Secretary.
Deputy Treasury Secretary Wally Adeyemo said authorities continue to investigate whether Bitzlato was used to help circumvent sanctions that were imposed on Russia over its invasion of Ukraine.
The fascinating thing about this case is that the exchange doesn't even offer service to US citizens and it is based in China. However, the arrest was carried out through a joint action by US and French authorities who have recently seized Bitzlato's website.
I have a feeling there's more than meets the eye about this event and as the days go by, the wheels will fall off and more will be unravelled. In any case, isn't it fascinating how the Feds dealt so swiftly and decisively on this $700m case but kept the gloves on for the FTX case that caused more harm?
Ramifications
Since this story broke out, the mild pump we were enjoying seems to have halted. This is in keeping with the theme of FUD hampering any potential growth in the market, at least.
It is almost like the mainstream FUD media, in conjunction with the Bears, have an Arsenal of stories just waiting to be pushed to the public's eye to curb any pump. I mean, when you consider this Bitzlato event, it starts to seem less like a coincidence.
In any case, I don't think this Bitzlato event has enough powder to any major lasting damage. I expect the FUD to be absorbed in a couple of days and the return of the pump.
The way I see it, this event, just like the FTX event, isn't an indictment of crypto but more about bad actors. The players in question have been apprehended by law enforcement, sparse consolation but at least it counts.
Secondly, unlike the FTX situation, Bitzlato situation has nothing to do with the safety of funds but more about illicit activities run on the exchange. All you have to do now is hope the exchange you use doesn't support criminals.
Not much has been said about how non-criminal users are affected, but it is safe to say that it will not be a nice experience. This is one more reason why your funds aren't SAFU on exchanges and I always encourage people to hold assets on chain.
Bitcoin dropped below $21k, Hive is now trading sideways in the 36 cents and the general crypto market pump has been temporarily halted. This is only temporary and in my opinion, this is one of those few moments in history where future millionaires will be made because they decided to take a chance when fear was in the air.
Disclaimer
This is not financial advice, always do your own research before investing in crypto*
