Cryptocurrency lender Genesis is preparing to file for bankruptcy as the company works towards a deal with creditors. The move would make it the latest casualty of the ongoing crypto bear market.

The U.S. Justice Department and Treasury Department have charged Hong Kong-based cryptocurrency exchange Bitzlato with money laundering and arrested its founder, Anatoly Legkodymov, in Miami.

Nasdaq-listed cryptocurrency exchange Coinbase has said it will halt operations in Japan over the volatile market conditions. Coinbase Japan users will have until February 16 to withdraw their fiat and cryptocurrency holdings.

 Top stories in the Crypto Roundup today:

• Crypto Lender Genesis Prepares to File for Bankruptcy
• US Prosecutors Charge Crypto Exchange Bitzlato With $700 Million Financial Crimes
• Coinbase to Halt Operations in Japan
• Digital Assets are Increasingly Correlated to Equities

Crypto Lender Genesis Prepares to File for Bankruptcy

Cryptocurrency lender Genesis is preparing to file for bankruptcy as the company works towards a deal with creditors. The move would make it the latest casualty of the ongoing crypto bear market.

Genesis is a subsidiary of the Softbank-backed crypto conglomerate, Digital Currency Group (DCG), which has been in negotiations with creditors since mid-November. Genesis owes creditors more than $3 billion, including $900 million to customers of Gemini, the exchange headed by Cameron and Tyler Winklevoss.

A pre-packaged deal that would include cash and equity in DCG is reportedly being negotiated with creditors. The company’s collapse would also trigger the repayment of a $350 million loan made by Chelsea FC owner Todd Boehly’s investment group.

Earlier this week, DCG halted dividends as it started focusing on “strengthening our balance sheet by reducing operating expenses and preserving liquidity.” Last week, the U.S. Securities and Exchange Commission sued both Genesis and Gemini over the latter’s “Earn” lending program, saying it was an unregistered securities offering.

US Prosecutors Charge Crypto Exchange Bitzlato With $700 Million Financial Crimes

The U.S. Justice Department and Treasury Department have charged Hong Kong-based cryptocurrency exchange Bitzlato with money laundering and arrested its founder, Anatoly Legkodymov, in Miami.

Authorities seized the cryptocurrency exchange, saying it processed more than $700 million in illicit funds, breaking rules meant to thwart money laundering.  The Treasury's Financial Crimes Enforcement Network (FinCEN) labelled the company a “primary money-laundering concerns,” which is among the most serious sanctions in the government’s arsenal.

Treasury Deputy Secretary, Wally Adeyemo, said the label effectively declares the exchange “an international pariah.” According to Justice Department officials, the little-known exchange offered peer-to-peer services and hosted wallets of criminals buying and selling illegal goods.

According to FinCEN, Bitzlato played a role in processing illicit transactions for ransomware actors in Russia, including some connected to the Russian government. The company was also tied to routine transactions with Russian-based Hydra Market, a darknet market targeted by authorities last year.

Coinbase to Halt Operations in Japan

Nasdaq-listed cryptocurrency exchange Coinbase has said it will halt operations in Japan over the volatile market conditions. Coinbase Japan users will have until February 16 to withdraw their fiat and cryptocurrency holdings.

The company’s decision to exit Japan comes only a few weeks after rival cryptocurrency trading platform Kraken also announced it would cease operations in the country.

Coinbase noted it wants to assure users it segregated users’  Japanese Yen and crypto assets in its custody in compliance with regulations, and is “committed to ensuring that all our customers can withdraw their assets at their earliest convenience.

Cryptocurrency holdings held on Coinbase on or after February 17 are set to be converted into Japanese Yen. The month following that date will see Coinbase send the remaining JPY balances to a “Guaranty Account at the Legal Affairs Bureau in accordance with legal requirements.”

Digital Assets are Increasingly Correlated to Equities

Throughout the past year, digital assets showed a significant correlation with traditional assets. Bitcoin and Ethereum experienced a decline of 65.4% and 68.3% respectively in 2022, which is comparable to the decline of 33.6% for the NASDAQ 100 and 19.0% for 10-year US Treasury Bills.

As market conditions continue to be challenging and affect the economy, we anticipate that the correlation between crypto assets and equities will start to decrease in 2023.

Read more on CryptoCompare’s 2023 Q1 Outlook.

State of the Crypto by Top Tier Exchange Volume

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