Crypto Outlook at The World Economic Forum
The US Justice Department announced on Wednesday that Anatoly Legkodymov, the Russian operator of the China-based crypto exchange Bizlato, has been arrested. Bizlato was a crypto exchange that allegedly worked with darknet blackmarket Hydra Market, which dealt in illicit trade and served as a safe haven for ransomware attackers, according to the DOJ.
The US Justice Department issued a vague statement on Wednesday that it would “announce a major, international cryptocurrency enforcement action,” and noting that the US Treasury Department would also be making its own statement.
The announcement comes at a time when former FTX crypto exchange CEO Sam Bankman-Fried is facing charges of wire fraud, securities fraud, and conspiracy. The DOJ stressed that criminals using the crypto space for scams and other criminal activity should be aware the agency will use “every tool” to crack down on their activities.
Mr Bankman-Fried’s company — long considered one of the biggest crypto exchanges alongside Binance — declared bankruptcy after allegedly using — and losing — customers’ funds as investment capital. Investigators believe FTX lost nearly $8bn worth of its customers’ money before declaring bankruptcy.
DOJ says Bizlato head was aware Hydra transactions were illicit, customers were ‘known to be crooks’
The Department of Justice claimed that Bizlato’s founder, Anatoly Legkodymov, was aware of the illicit nature of Hydra Market transactions, and knew that its users were using false identities while making transactions.
“Bitzlato’s customers routinely used the company’s customer service portal to request support for transactions with Hydra, which Bitzlato often provided, and admitted in chats with Bitzlato personnel that they were trading under assumed identities,” the DOJ said. “Moreover, Legkodymov and Bitzlato’s other managers were aware that Bitzlato’s accounts were rife with illicit activity and that many of its users were registered under others’ identities.”
According to internal chat logs obtained by the DOJ, Mr Legkodymov wrote to a colleague that their customers were “known to be crooks.” Officials at Bizlato reportedly warned the founder that its users were “addicts who buy drugs [at Hydra]” and “drug traffickers.”
Graig Graziosi18 January 2023 18:15
Crypto market cap hit $1 trillion briefly before diving
Earlier today the crypto market cap touched $1 trillion for the first time since November, just before 2022’s mass sell-off and FTX collapse.
It’s unclear if the drop was the result of the DOJ’s announcement, or due to traders selling at the higher price, or both.
Despite the drop, Bitcoin has remained popular among investors, gaining 30 per cent this year.
Graig Graziosi18 January 2023 18:00
What is ‘Hydra Market’ ?
What was ‘Hydra Market,’ the darknet black market that was one of Bizlato’s largest customers?
According to the Department of Justice, Hydra Market is “an anonymous, illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents, and money laundering services that was the largest and longest running darknet market in the world.”
“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,” the DOJ wrote. “Bitzlato also received more than $15 million in ransomware proceeds.”
Graig Graziosi18 January 2023 17:53
Justice Department arrests head of China-based crypto exchange operating on dark web
The US Justice Department announced on Wednesday that Anatoly Legkodymov, the Russian operator of the China-based crypto exchange Bizlato, has been arrested.
“As alleged, Bitzlato sold itself to criminals as a no-questions-asked cryptocurrency exchange, and reaped hundreds of millions of dollars’ worth of deposits as a result,” U.S. Attorney Breon Peace said in a DOJ release. “The defendant is now paying the price for the malign role that his company played in the cryptocurrency ecosystem.”
Graig Graziosi18 January 2023 17:15
Bitcoin price plummets amid major DOJ crypto announcement
The price of bitcoin has fallen by 5 per cent in the space of an hour after the US Department of Justice announced plans to introduce major international cryptocurrency enforcement action.
The world’s leading crypto dropped from $21,500 to around $20,500, reversing an upward trend that had seen its price rise by nearly a third since the start of the year.
Read more from The Independent’s Anthony Cuthbertson in his story below…
Graig Graziosi18 January 2023 16:59
Crypto exchange Binance calls for flood of ‘salute’ emojis as DOJ announces crypto action
Binance, the largest crypto exchange in the world, issued a strange tweet on Wednesday saying today “feels like a day to attempt a world record,” before asking followers to leave “salute” emojis in the comments.
The post was issued around the same time the DOJ announced that it planned to announce major crypto enforcement action during a press conference this afternoon.
Graig Graziosi18 January 2023 16:55
‘Dr Doom’ economist says ‘90 per cent of crypto is a scam’ at Davos
Dr Nouriel Roubini — who is sometimes called “Dr Doom” for his grim economic predictions — said that “literally 90 per cent of crypto is a scam” during the Davos World Economic Forum on Wednesday.
“FTX and SBF are not an exception — they’re a rule,” he said during a Yahoo Finance event.
He went on to predict a forthcoming bust.
“Literally 90% of crypto is a scam. A criminal activity,” he said. “A total real-bubble Ponzi scheme that is going bust.”
Graig Graziosi18 January 2023 16:37
Welcome to the live blog
Welcome to The Independent’s live coverage of the Department of Justice and the Treasury Department as they announce “major international cryptocurrency enforcement action” later today.
Stay with The Independent for the latest updates.
Graig Graziosi18 January 2023 16:20
Crypto crime network shut down in ‘significant blow’ to fraudsters, DOJ announces
The US Department of Justice has announced that it has dealt a “significant blow” to the crypto crime landscape after arresting a Russian national alleged to have founded a major criminal online platform.
Cryptocurrency exchange Bitzlato processed more than $700 million dollars’ worth of illicit funds, according to the DOJ, advertising its services to users who were “known to be crooks”.
Alleged founder Anatoly Legkodymov was arrested in Miami on Tuesday. Read more from The Independent’s Anthony Cuthbertson in his story below…
Graig Graziosi16 January 2023 17:30
Deputy Attorney General says DOJ will use ‘every tool’ to punish criminal abusers of crypto markets
Deputy Attorney General Lisa Monaco said that the DOJ would use “every tool” it had to punish criminals operating within the crypto space.
“The DOJ will use every tool that we have to attack the criminal use of the dark net and cryptocurrency,” she said. “And we’re taking steps to address the crisis of confidence in the crypto markets where ciriminals and fraudsters work.”
Graig Graziosi16 January 2023 17:25