The US Department of Justice was mocked by the crypto community after the authorities made a big deal out of taking down Bitzlato, a small crypto exchange based in Hong Kong. However, the announcement did cause FUD in the crypto market for a while, driving prices down quickly, proving how sensitive the market is to the messages coming from the officials.
On January 18th at 12pm, ET, the DOJ said at a press conference that Bitzlato was charged with laundering $700m and its founder was arrested. Prior to the announcement, the DOJ released a notice that it was going to "announce a major, international cryptocurrency enforcement action". The message caused lots of speculation in the crypto community, and quickly dragged down the prices. $BTC went from over $21,500 down to less than $20,500 in one and a half hours.
However, the "major, international enforcement action" turned out to be against Bitzlato, an exchange that held only $6m at its peak. The FUD was then relieved, and the prices bounced back a bit. The crypto community on Twitter started to mock the DOJ for offering much cry and little wool. Some people were not satisfied that the DOJ went after Bitzlato and made a big deal out of it, but did nothing against other companies like FTX.
Bitcoin Magazine said, "DOJ busts Bitzlato instead of Celsius, Luna, 3AC, Genesis or BlockFi. Pathetic." sassal.eth, founder of The Daily Gwei, thought alike, "Do Kwon and 3ac boys still on the loose but thank god the DOJ put their resources into going after Bitzlato." Memes expressing similar opinions began floating on Twitter as well.
Crypto news account db took a more sarcastic tone, "FFS I knew I shouldn't have kept funds on Bitzlato." Some people, including crypto analyst Dylan LeClair, said they'd never heard of Bitzlato before, despite having studied crypto for a long time. He also said, "someone tell the DOJ that 7 figures crime in crypto is called a regular Wednesday."
Meanwhile, there were voices defending the DOJ's action. Stuart Alderoty, general counsel at Ripple, said, "I also heard about Bitzlato for the first time today, but (despite the funny memes) the DOJ's action makes clear that they will prosecute those who exploit the crypto ecosystem to commit crypto crimes. That's good policy."
As satiric as the community was, it was undeniable that the crypto market took a hit by DOJ's announcement. According to CoinGlass, over $110m worth of futures positions long on $BTC and $ETH were liquidated in the past 24 hours. "PTSD is still prevalent and it took the stage today, causes people to instinctually sell/short when they see DOJ, CRYPTO and ANNOUNCEMENT in all caps on their timeline. Efficient market tbh." Crypto KOL RookieXBT said.
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