Cryptocurrencies drop after Bitzlato shutdown and Genesis rumors.
180 degree reversal of the cryptocurrency market cryptocurrencies. After two weeks of uninterrupted risethe upward trend of bitcoin (BTC) and the ethereum (ETH) has come to an end. The world’s largest cryptocurrency has lost more than 2% in the past 24 hours and is trading below $21,000, while the market’s leading altcoin has fallen even more, by 3%, and is trying to recover. maintain at $1,500.
Cryptocurrencies were having a peaceful Tuesday when, after Wall Street opened, the Department of Justice (DoJ) announced “regulatory action.” Shortly thereafter, the DoJ announcedThe paralysis of operations of the little-known Hong Kong stock exchange, Bitzlato. and the arrest of its founder, the Russian Anatoly Legkodymov, for money laundering and financing.
According to the DoJ, the cryptocurrency exchange offered “peer-to-peer” services and hosted the digital wallets of criminals who bought and sold illegal goods, which amounted to a total of 1.5 million euros. $700 million mobilized in direct and indirect transfers in recent years with Hydra, one of the largest illegal deep web marketplaces. which was closed last April as part of a joint US-German action. Assistant Attorney General Lisa Monaco said the crackdown was the largest action against a criminal network in the crypto space to date.
In sum, the blockchain analysis company Santiment points this out. digital assets moderated their declines following this news, as “The operators expected the DoJ to prepare something more drastic”..
🤷 The #DepartmentOfJustice took enforcement action against #Bitzlatoa russian miner #crypto exchange. Speculation led to a decline of 4.1%. #Bitcoin as traders feared the DOJ was focusing on something more drastic. Prices have now risen slightly. https://t.co/lcvNfq5Pfq pic.twitter.com/n8JPwfcutM
— Santiment (@santimentfeed) January 18, 2023
In addition, rumors are multiplying about a a possible bankruptcy filing by crypto-lender Genesis.a subsidiary of Digital Currency Group, due to cash flow problems. The company is in a dispute with the Gemini scholarship over the Gemini Earn programwhich ended this month, two months after Genesis froze withdrawals. The Winklevoss brothers, founders of Gemini, accuse Digital Currency Group of owing more than $1.6 billion, $900 million of which is directly related to the Earn program.
In connection with this, Digital Currency Group yesterday suspended the corresponding dividend for the last quarter of 2022 in order to “preserve liquidity” of the company. Also, it should be remembered that the Securities and Exchange Commission (SEC) accused both platforms of selling unregistered securities in the Earn program.
Other experts also point out that the heavy losses recorded on Wall Street on Wednesdaydriven by Retail sales and producer prices worse than expected in Decembermay have penetrated crypto space.
In this sense, Giles Coghlan, highlighted the growing correlation between digital assets and technology stocks.arguing that the Nasdaq rally occurred “under the assumption that US inflation is receding and that the short-term interest rate market forecast of two Fed rate cuts this year is correct” .
“We could see a similar recovery in the cryptocurrency markets. Ultimately, the cryptocurrency rally is likely to continue as tech stocks rally. However, with all eyes on earnings season, things could change quickly,” he told “CoinDesk.”
For his part, Santiment points out that the “rally” experienced by meme tokens like the dogecoin (DOGE) where the Shiba inus (SHIB) are “contrary” to the good health of the market. “Every time the price of DOGE starts to rise rapidly, the whole market crashes moments later.”they say. After the strong rises of the past few days, DOGE and SHIB are down 6% and 7% respectively.
Elsewhere in the market, sharp declines of 3% in the energy sector were recorded. Binance Coin (BNB) and in the cardano (ADA), polygon (MATIC), solana (SOL) and polkadot (DOT).which lose between 3 and 5%.