Cryptocurrency news - live: Genesis to file for bankruptcy amid ‘major’ US crypto move

Department of Justice officials say they will reveal the news at 12pm in Washington DC

Crypto Outlook at The World Economic Forum

Cryptocurrency firm Genesis Global Capital is planning to file for bankruptcy as early as this week, Bloomberg reported today.

The bankruptcy filing has been expected since the November fall of the FTX cryptocurrency exchange.

Meanwhile, the US Justice Department has announced that Anatoly Legkodymov, the Russian operator of the China-based crypto exchange Bitzlato, has been arrested. Bitzlato was a crypto exchange that allegedly worked with the 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 noted 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.

Key Points

• Justice Department arrests head of China-based crypto exchange operating on dark web
• Bitcoin prices dive ahead of DOJ announcement
• What is Hydra Market?
• FBI says it will ‘relentlessly’ pursue crypto criminals
• Genesis Global Capital to file for bankruptcy this week, sources say
• Influencer Logan Paul lays out roadmap for addressing Crypto Zoo scandal

[19 January 2023 10:00 · Graig Graziosi]

Crypto users lambast DOJ over Bitzlato announcement

The crypto market took a dive early on Wednesday after the US Department of Justice announced “enforcement action” related to the cryptocurrency space.

While investors braced for the worst — as reflected in the market dive — the DOJ announced it had arrested the founder of Bitzlato, a Chinese crypto exchange run by a Russian national that dealth with an illicit darkweb market.

Many crypto enthusiasts had never heard of the exchange. Several mocked the DOJ in response.

Another user likened it to a small-town police department celebrating a minor drug bust.

[19 January 2023 11:00 · Graig Graziosi]

Indian finance leader tells Davos attendees idea that crypto will thrive while fiat falters is ‘nonsense'

Former Reserve Bank of India Governor Raghuram Rajan told attendees at the Davos World Economic Forum on Wednesday that the notion that cryptocurrencies would thrive while fiat money crashes is “nonsense.”

“The idea that somehow cryptos are going to maintain value, while the fiat currencies collapse. That’s nonsense,” he said.

He later told Reuters’ Global Markets Forum that “fiat currencies have won out in terms of which is more credible.”

Mr Rajan said that the collapse of the cryptomarket in late 2022 has made space to examine the “true value” of blockchain and smart contract technologies.

[19 January 2023 12:00 · Graig Graziosi]

Influencer Logan Paul lays out roadmap for addressing Crypto Zoo scandal

Influencer Logan Paul announced Tuesday that he had developed a three-step plan for correcting course on his Crypto Zoo NFT game, which fellow YouTuber Coffeezilla alleged was a “scam” in a trio of investigative videos examining the project and the investors who lost money on the seemingly abandoned project.

Paul — who initially threatened to sue Coffeezilla but has since walked that back — said he and Crypto Zoo co-founder Jeff Levin would burn their tokens to ensure they did not have a financial stake in the NFT game project.

He also said he would personally invest 1,000 ETH — approximately $1.5m at its current market price — to refund Zoo token holders the initial mint price of 150 ETH — just over $225,000 at current price — so long as they burn their tokens.

That refund would not repay the investors in Zoo token who sold during the more than a year when the Crypto Zoo project sat dormant.

His third step is to finish the game as it was originally advertised by Paul more than a year ago.

[19 January 2023 13:00 · Graig Graziosi]

Crypto exchange targeted by DOJ responding with ‘oops, sorry’ to customers on automated social media channel

Chinese-based cryptocurrency exchange Bitzlato — whose CEO Anatoly Legkodymov, was arrested by the DOJ in Miami on Tuesday — is responding to its customers through an automated message on Telegraph with the phrase “oops, sorry” along with a sad face emoji, according to NBC News.

The DOJ alleges the company frequently dealt with Hydra Market, an illicit digital marketplace and haven for ransomware attackers. The agency alleged that Mr Legkodymov was aware that his customers were involved in criminal activity and using aliases to hide their identities.