Bitzalo In $700M Scheme: Why Bad Actors Will Now Be Blamed For Price Corrections
I heard about how the US justice department shut down a crypto exchange called Bitzalo for laundering money for criminals with Russian connections to it. Apparently Anatoly Legkodymov the founder ran a crypto front for criminals who were laundering illicit money running up to $700M in just a few years. The issue is that Bitzalo was like a decentralized bank for criminals. Because this money was dirty Russian funds, Bitzalo majorly provided a front for these criminals with Russian connections to successfully recycle these illicit funds and this has gone on for some years now.
Now while $700M might not be $15B,
but it feels like right out of the frying pan of FTX into something different
I guess the people who have been feeling that an imaginary crypto exchange would surely be shut down now have their wishes/fear/concerns come to pass. The truth is, I feel less frightened about this, and the reason is that I'm sure the core of the crypto network and community has never heard of or used this exchange. In fact, I'm sure it made the news because of the recurrent situation of exchanges and their founders being shut down for doing what they shouldn't have done. These Bitzalo guys aren't trying to be coy and blame the technology for being unstable hence failing them.
The Player & Not The Game Taking Credit
For example, the fact that SBF wouldn't admit that he's a thief only creates an impression to normies, government agencies, and crypto critics that crypto might be the problem and not FTX. But in this situation, it's clean and clear, a criminal is using a system, he may use fiat and we cannot blame fiat for this, because the concentration would be weeding, shutting down, and arranging a criminal, so I think this shouldn't be any less because it was done using crypto.
Sadly CEXs will always Make the news For Bad things
Before FTX happened, arresting a shady exchange owner for providing a money laundering front for criminals wouldn't make the news and one of the reasons why I think so is because, this feels more like a criminal/bad actor, who tries to take advantage of the decentralization of Crypto to house criminals. Of course, I know that the anonymity that comes with Crypto would be blamed as the reason why these guys successfully laundered money over the years would not be noticed, but, every system comes with advantages that are always exploited for negative gains.
Decentralization Is Exploitable
For example, the decentralized nature of crypto is to give people total control of their assets, but certainly, we all know that bad actors, will always exploit something as advantageous as that to suit their nefarious purposes. So I guess the US justice department would understand this, it'll be more of a criminal case because of the tech of Crypto. But SBF and FTX have happened. This means that even if this shouldn't have been an issue, it's now an issue because it feels like there are now more crypto exchanges with nefarious intents rather than providing the usual services of buying, selling, and holding for asset owners.
Corrections Or Bitzalo?
However, it's visible to note that there have been some little corrections here and there in the past two days, a lot of people are not beginning to tie these dumps and corrections to Bitzalo, I don't blame them, after $700M is involved and something has to happen to that money and whatever the US justice department deems of that money might shake the market that's showing signs of recovery and greens. However, I wouldn't say this completely too. While I'll partially blame Bitzalo and its founder. I think we're also simultaneously experiencing some corrections, many people have sold to take profits and waiting for buybacks when prices hit lower.
I believe that people will continue to loathe and be wary of CEXs from now on
Why?
because whatever prospective dips we might see will no longer be seen as the market doing its thing. This is because FTX has ushered us into a new era of crypto, where witch-hunting and regulations will stare at centralized exchanges for a long period. So, any exchange that's doing anything shady might be caught anytime soon, because the witch hunt is on. But the number of exchanges that have come under scrutiny has been surprising, it feels like the FTX ripple might create some instability for some time, but I do believe that when these guys are finally flushed away, we can then finally have fewer bad actors in the system and we can finally take off again.
The Witch-Hunt Is On
I'm sure it was the intentionality of this witch hunt that made it possible for Bitzalo to be finally shut down. This means that this project and its money laundering activities have been flying under the radar before the FTX blow-up, and it's a mixed feeling knowing that these guys are going under, in comparison with the sad feeling of knowing that they're shaking the resolve of Crypto and unsettling it to some sizeable extent. However, I won't say completely say Bitzalo has been the reason for these corrections, I'll say it's just the market doing its things and showing some corrections. I don't think too many people will slip into FUD because of Bitzalo.
A Dip Or A Buying Opportunity
On the contrary, many are happy to buy this present dip because there's a different belief out there that crypto is still moon-able post-FTX because of the recent recovery we seen. So I think In a week or two, the market will stabilize once more. I know it's concerning that there will always be a potential Bitzalo out there, it might be foolhardy to think we've finally fished out all the bad actors running big scams. However, the worst is behind us, people who have taken profit before now will see it as an excellent position to buy back, the likes of Bitzalo might keep happening now and then, but I think recovery would be inevitable going forward.
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What a bad news! But, as US government decided to shutdown bitzalo exchange, what about the money in that platform? Will they take advantage of it or will they allow bitzalo to take it?
The money actually is illegal money, so I think these funds might be ceased, since it was illicit money brought into crypto.
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Seems like this will be a recurring story in different shape going forward. But then...
Every system has a weak point to exploit. Crypto's anonymity has been a big strength to these bad actors. They stay underground a long time planning and strategizing. By the time they are found out, someone has lost money.
Its great to dig deep before investing. DYOR has been mentioned frequently. Anyone that ignores it does so at their own risk
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In reality, most government doesn't care about any illicit thing done with fiat currency because they recognize fiat and it's controllable and manipulable but because crypto isn't. It has become a bone of contention. I think the war of government vs crypto will always continue, even if fiat has its flaws as well.
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I hear about Bitzalo and my first thought was "oh fuck, who be this one again?". The exchange isn't that popular and doesn't have the powder to crash the market but I understand your fear
The whole FTX debacle left a sour taste in the mouths of investors, and while the market saw some relief, people are still spooked. Any weirdness will make investors take a step back
I do not even have any fear at all,. Mostly highlighting the fear of others. I basically feel it's a clear case of scam and money laundering and since it's a exchange for criminal activities, it's not going to really affect the market.
I haven't heard of this exchange before until this news surfaced on twitter says it all about dirty money.... Somehow bears are trying to find excuses to short and dump market but seems like this ain't Gonna happen.
It's all about dirty money like you've said, I believe this wouldn't really have much effect on price.
Yeah, let's see how manipulators will play their next move.
I’ve never in my life come across Bitzalo exchange as you said. I’ve seen other people on Twitter claim that they have also never heard of it and In fact, it did make the news because of the recent SBF with the FTX situation.
What will happen with SBF is that he would probably plead guilty in the long run allowing him to be given a lighter sentence.
Am not worried when all these unknown or shady exchanges are closing, am worried because they keep on giving the government reason to regulate crypto, something which a lot of us will want to remain decentralized.
The dip will turn out good but as usual, few people will buy the dip and enjoy it when it stabilises once more.
All this news will end up scaring new investors who want to get involved in the market, even though it’s good for the market new people wouldn't know that.
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I also have not heard of this exchange before. But I basically think it's more like a black market for money laundering and criminal activities and they have known illicit business people who deal with this exchange.
I don't think SBF would ever plead guilty. This is because he keeps telling the world that everything happened as a result of a mistake and not because he was a thief and scammer. So if he keeps following this narrative it makes it easier for him to claim culpable deniability.
I don't know what will happen but I think eventually all the shady exchanges are going to be exposed. But I think the worst is behind us.
We can say this is one of the beneficial aspects that happened with the FTX saga. Authorities are now sweeping the crypto space with a magnifying glass and weeding out many of the bad actors. I think this bitzalo event will not have that much of an impact in the crypto space but people could use it to prove a point or present a different narrative.
You're right, it comes with a positive keynote. Because of FTX authorities are now trying to buzz down on exchanges to see which is truly playing some bad acting and all that.
Definitely right again since regular people are not even losing money, this could just be another fallen exchange that could tell people to be careful.
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Considering how much money the major banks launder money, I think the 700million from the crypto exchange isn't so bad and it was done over the course of a few years. There will always be bad actors and I just think that it sets a bad precedent because the government can now close any exchange it wants based on their own data (whether true or not).
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The truth is, the Money laundering was the target. The exchange was a front used in doing this. So I don't think prices would be affected and nobody really lost any money except these guys, so I think we're actually good to go if you ask me.
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It's the small ask and then they move it towards more stricter things later on. We have seen them shift the goal post a lot and I do believe there is money laundering. However, I think it happens in almost every single exchange and thus everyone is a target if they get on the government's bad side.
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I had never heard of this exchange and wonder if it even existed.
I think we barely heard about it or know it because it mostly a criminal front for laundering money through Crypto.
If we truly want crypto to reach it full potential we must first send out all these bad actors and I won’t be surprised if something like this happen again
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I think you're right, however, we've gotten into the era where we're gradually chasing these guys out. It'll be great for Crypto in the long run.
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I had never heard of this exchange and I learn of this story through your post.
I agree with you that it's dirty money and certainly the market is not significantly influenced by it even if everything influences the markets in a small or large way... of course, small jolts are always better than big earthquakes heh heh!
Thanks for the info!