🐻 WTF is a Bitzlato? 🤔

Plus, Gemini prepares for bankruptcy

AuthorAuthor

Rahul & Oleena
January 19, 2023

Hey frens, welcome back to Web3 Seems Legit, your crypto BFF. We dumb down the latest web3 news for you in 5 minutes or less, so you can become 10x smarter before you even finish your lunch.

In this issue:

  • The DOJ takes ‘major action’ against a crypto exchange. No, it’s not Binance.

  • Is SHIB coin more than just a meme? The doge meme coin enjoys a mini rally following its L2 announcement.

  • In other news: Genesis prepares to file bankruptcy and the SEC charges SBF.

The DOJ takes ‘major action’ against a crypto exchange

Following a crazy year of scams, fraud and crooks, we all braced ourselves for some big regulatory crackdowns in 2023. But it seems like our definition of “big” is a bit different from the prosecutors.

Mid-Wednesday afternoon, the crypto market went into a mini panic when the US Department of Justice (DOJ) spooked us by announcing a “major, international cryptocurrency enforcement action”.

Within minutes, the market fell roughly 5%. Was this going to be another big FTX-sized implosion? Is it Binance? DCG?

Good guesses, but no. The answer is Bitzlato. If you’re wondering WTF a Bitzlato is, don’t worry, you’re not the only one.

Okay, so seriously, what is Bitzlato?

Here’s what we know. Bitzlato is a Hong Kong-based crypto exchange founded by a Russian national named Anatoly Legkodymov. He was taken into custody on Wednesday.

According to authorities, the exchange did not meet AML requirements and processed over $700 million in illegal funds mostly tied to a dark web marketplace.

That’s great and all, except the fact that no one’s heard of Bitzlato. At its peak, the Chinese crypto exchange held $6 million in funds, compared to FTX which was in the billions. 

Needless to say, it was a pretty underwhelming announcement by the DOJ. Where were they when FTX was still running? Why are they spending time catching small fish? So many questions…

Meanwhile, the founders of the bankrupt hedge fund Three Arrows Capital (3AC) are looking to raise $25 million to launch a new crypto exchange called GTX.

So is the DOJ going to keep letting these scammers off the hook until they reach ZTX?

Meanwhile, Binance continues to prove to be the FUD-resilient crypto exchange. Despite the targeted attacks and the attempted bank runs, Binance has continued to operate and process transactions as usual.

Is SHIB more than just a meme?

Love it or hate it, meme coins are here to stay. Though they are known to have no use or utility, meme coins are the perfect representation of today’s degenerate culture that values high-risk fun (gambling) and network effect over anything.

But it seems like the joke that no one took seriously could actually become legit. This past week, $SHIB coin rallied over 20% upon announcing the upcoming launch of Shibarium, a Layer 2 (L2) network built on Ethereum.

What does this mean? Let’s break it down.

L2 blockchains are built on top of L1 networks, like Bitcoin, Ethereum or Litecoin. Why build an L2 network though?

From the announcement blog post:

“A Layer 2 blockchain provides the benefits of scalability, faster transaction times, lower fees, and an expanded development framework.”

$BONE, initially a governance token will become the native token of Shibarium that will pay for gas fees and reward validators who approve transactions.

With $BONE as the new token for paying gas, $SHIB will become the token to be burned every time a transaction is made. The permanent removal of tokens from the total supply paired with a steady demand will encourage the price to grow, or at least prevent it from falling.

Not only is SHIB building their own ecosystem, but they are also making moves into the Metaverse to provide further utility. SHIB: The Metaverse will be built on Shibarium and feature 100,595 plots of land that can be minted by $SHIB token holders.

But why purchase virtual land in the Shibaverse? Here’s what they had to say in their blog post:

"For this we are happy to confirm, that users who own land in SHIB: The Metaverse will be able to generate passive income, gather in-game resources, and generate rewards.

We will be introducing a unique, and exciting way to earn, while also awarding users to have a personal space in which they will be able to build and manage their own projects."

All this news has resulted in the mini-rally that pushed $SHIB up 20% this past week. Suddenly, the coin that was heavily reliant on its meme value is becoming a legitimate project with tokenomics.

This can be good or bad. Price will now be driven by fundamentals, which puts increased pressure on the SHIB team. Bad fundamentals mean bad prices. But from the looks of it, SHIB is on a good path.

Here is a good thread overview of it all:

Meanwhile, what does this look like for their main rival Dogecoin? Following $SHIB’s mini pump, $DOGE was also up 5%. In our POV, if SHIB’s shift from fun to fundamentals fails or succeeds, it could be good for DOGE either way. Whether we want to admit it or not, we’re always down for a good meme.

In other news

Surprise, surprise, we've got another one down folks. Following the recent SEC charges, Genesis is reportedly preparing to file for bankruptcy.

Hot off the press, the SEC charges Sam Bankman-Fried of FTX for defrauding investors. It's about time the SEC does something productive.

Meanwhile, the new FTX CEO is considering pressing the "reboot" button on the exchange. That should fix the problem.

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