DoJ crypto news: Bitcoin price crashes amid ‘major’ new cryptocurrency move

Brad Garlinghouse, the CEO of Ripple, which provides “crypto solutions for businesses,” told CNBC’s “Squawk Box” that he was optimistic a lawsuit involving the XRP cryptocurrency will be settled this year.

The US Securities and Exchange Commission sued Ripple in 2020, claiming the company illegally sold the XRP cryptocurrency to investors in 2012 without first registering it as a security.

“We’re optimistic that this will certainly be resolved in 2023, and maybe [in] the first half,” Mr Garlinghouse said. “So we’ll see how it plays out from here. But I feel very good about where we are relative to the law and the facts.”

He also slammed the SEC, calling the regulatory agency “embarassing.”

“The SEC’s behavior in some of [the lawsuit] has been embarrassing as a U.S. citizen,” he said in a seperate interview with CNBC. “Just some of the things that have been happening, like you’ve got to be kidding.”

Crypto brokerage firm Genesis Global Capital may be preapring to file for bankruptcy, according to a report from Bloomberg.

Citing sources with knowledge of the situation, the outlet reports that the firm is in negotiations with creditors amid a liquidity crunch. Bloomberg previously reported that the company said it may have to file for bankruptcy if it can’t raise the funds to stay afloat.

Genesis suspended withdrawls from its platform in November, shortly after the start of crypto exchange FTX’s collapse.

In recent years, crypto companies have dominated the promenade at the Davos World Economic Forum, but this year they appear to have scaled back their visibility, CNBC reports.

With the exception of a lone, flash orange crypto-advertising sports car, crypto company advertisements were reportedly far less prominent this year.

An NFT shop that was selling digital tokens alongside images closed up this year after prices for the assets dropped significantly in 2022.

Cliff Sarkin, chief of strategic relations at Casper Labs, told the outlet that the remaining crypto businesses at Davos are “subtantive projects” and “the real deals.”

FBI Assistant Deputy Director Brian Turner said the law enforcement agency would “relentlessly pursue” criminals acting in the crypto space following the arrest of Bizlato crypto exchange founder Anatoly Legkodymov.

“The FBI will continue to pursue actors who attempt to mask their criminal activity behind keyboards and use means such as cryptocurrency to evade law enforcement,” he said, according to the DOJ. “We, along with our federal and international partners, will work relentlessly to disrupt and dismantle these types of criminal enterprises. Today’s arrest should serve as a reminder the FBI will impose risk and consequences upon those who engage in these activities.”

Mr Legkodymov, a Russian national living in China, was arrested in Miami on Wednesday.

Several financial leaders speaking at the Davos World Economic Forum made clear they did not trust cryptocurrencies, and insisted to attendees that traditional investment and banking institutions were still safe to use.

Senior Minister Tharman Shanmugaratnam of Singapore said that crypto assets were “slightly crazy,” eliciting a laugh from the audience, according to Iris Market IQ.

UBS Chairman Colm Kelleher said that regulators had faltered in their ability to police “non-bank” entities, which includes cryptocurrencies.

“Regulators have — with respect — taken their eyes off the ball in terms of the non-banking sector,” Mr Kelleher said, according to Reuters.

European Central Bank Governing Council member Francois Villeroy de Galhau agreed, saying “we should rush to some urgent non-bank regulation starting with cryptos.”

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.”

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.

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.”

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.”

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…