Enforcement goes on with Bitzlato action: Law Decoded, Jan. 16–23

The good news of the last week is that Bitcoin (BTC) has continued to rebound, making around 10% up from Jan. 16 to Jan. 23. But the worrying trend of crypto companies making headlines due to their troubles with the law has yet to change.

The United States Department of Justice launched a “major international cryptocurrency enforcement action” against China-based crypto firm Bitzlato and arrested its founder, Anatoly Legkodymov. The department considers Bitzlato to be a “primary money laundering concern” connected to Russian illicit finance. While the exchange attracted little attention until the DOJ action, it had reportedlyreceived $206 million from darknet markets, $224.5 million from scams and $9 million from ransomware attackers.

The United States Financial Crimes Enforcement Network stated that crypto exchange Binance was among the “top three receiving counterparties” of Bitzlato in terms of Bitcoin transactions. However, it didn’t mention Binance as being among the top sending counterparties.

The United States Securities and Exchange Commission has followed the Commodity Futures Trading Commission in filing parallel charges against the crypto user allegedly behind the multimillion-dollar exploit of decentralized exchange Mango Markets. Avraham Eisenberg is accused of manipulating Mango Markets’ MNGO governance token to steal roughly $116 million worth of cryptocurrency from the platform.

Iran and Russia want to issue new stablecoin backed by gold

The Central Bank of Iran is reportedly cooperating with the Russian government to jointly issue a new cryptocurrency backed by gold. The “token of the Persian Gulf region” would serve as a payment method in foreign trade. The stablecoin aims to enable cross-border transactions instead of fiat currencies like the United States dollar, the Russian ruble or the Iranian rial. Reportedly, the potential cryptocurrency would operate in a special economic zone in Astrakhan, where Russia started to accept Iranian cargo shipments.

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EU postpones final vote on MiCA for the second time

The final vote on the European Union’s much-awaited set of crypto rules, the Markets in Crypto Assets (MiCA) regulation, was deferred to April 2023. It marks the second delay in the final vote, which was previously postponed from November 2022 to February 2023. The latest delay is due to a technical issue where the official 400-page document couldn’t be translated into the 24 official languages of the EU. Legal documents like the MiCA, which are drafted in English, must comply with EU regulations and be published in all 24 official languages of the union.

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Japanese regulators want crypto treated like traditional banks

“If you like to implement effective regulation, you have to do the same as you regulate and supervise traditional institutions,” said the deputy director-general of Japan’s Financial Services Agency’s Strategy Development and Management Bureau, Mamoru Yanase. The official added that countries “need to firmly demand” consumer protection measures from crypto exchanges, also asking for money laundering prevention, strong governance, internal controls, auditing and disclosure for crypto brokerages.

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Further reads

Going cashless: Norway’s digital currency project raises privacy questions

FTX fallout: SBF trial could set precedent for the crypto industry

Crypto to play “major role” in UAE trade, according to its foreign trade minister

Central African Republic eyes legal framework for crypto adoption