Regulator in Tokyo moves to ban insider trading in crypto market

In a recent announcement, Russia-linked cryptocurrency exchange Bitzlato revealed a temporary suspension of certain withdrawal requests, with the suspension taking effect as of Dec. 27. Asset seizureThe decision comes in the wake of French authorities seizing Bitzlato's assets in January last year, a move that also involved international law enforcement, including U.S. authorities. In a message shared on Telegram, Bitzlato explained the suspension: "… We are faced with the need to suspend special balance withdrawals and technical support. This is a temporary measure to prepare for and go through the upcoming court hearings regarding the seizure of user assets in France."Photo by Chris Karidis on UnsplashSpecial balance withdrawalsThe specifics of transactions categorized as "special balance withdrawals" were not disclosed by Bitzlato, and it remains unclear whether the withdrawal freeze is applicable exclusively to users in France. Despite the asset seizure and subsequent closure of Bitzlato's website, the company asserted in its latest statement that it managed to "close 70% of the balance" held at the time of the service shutdown. However, no details were provided on how the company intends to fulfill its obligations with its assets frozen. Bitzlato has been under scrutiny from the U.S. Treasury, which identified the exchange as a money laundering concern linked to illicit Russian financing. Transactions with Bitzlato have been prohibited by the U.S. government. Hydra Market counterpartyThe Department of Justice (DOJ) separately accused Bitzlato of facilitating money laundering and other crimes, alleging involvement in laundering $700 million connected to the now-defunct Russian darknet market, Hydra Market. The DOJ's United States Attorney Breon Peace characterized Bitzlato as an "open turnstile by criminals," while the exchange was deemed a "crucial financial resource" for Hydra Market, enabling the laundering of funds, including those from ransomware attacks. Registered in Hong Kong, Bitzlato served as the largest counterparty in cryptocurrency transactions for Hydra Market, a darknet marketplace for narcotics and illicit drugs. In April 2022, U.S. and German authorities jointly shut down the illicit marketplace. The legal troubles extend to company executives, with Bitzlato founder Anatoly Legkodymov pleading guilty to charges related to the illicit transfer of funds in the U.S. on Dec. 6. Legkodymov agreed to forfeit $23 million to prosecutors and faces a potential prison sentence of up to five years. He is currently imprisoned at the Metropolitan Detention Center (MDC) in Brooklyn, New York. European authorities also arrested senior management linked to Bitzlato in January 2023. The exchange's precarious situation highlights the challenges faced by cryptocurrency platforms amidst regulatory scrutiny and legal actions. The MDC facility also currently holds John Karony, the CEO of crypto company Safemoon and convicted fraudster and former FTX founder, Sam Bankman-Fried. The Department of Justice found itself the subject of major criticism on Friday, when it emerged that it had informed the court that it would not be pursuing a second trial against Bankman-Fried. A second trial would have centered upon campaign financing offenses. It would have likely implicated Bankman-Fried’s parents. According to federal prosecutors, the disgraced FTX CEO donated customer funds to the tune of $100 million to U.S. politicians. It’s unclear which of these politicians, if any, has returned the money, with critics alleging corruption.  

Token Cat Limited, a Nasdaq-listed Chinese automotive marketplace formerly known as TuanChe Limited, has approved a new digital asset investment policy that will allow the company to deploy up to $1 billion into cryptocurrencies as part of its treasury strategy. In a press release distributed via Chainwire, the Beijing-headquartered company said its board of directors signed off on a Crypto Asset Investment Policy authorizing the use of a portion of its cash reserves to acquire selected tokens under internal risk-management controls. Any purchased assets will be held with third-party custodians rather than managed in-house, the company said.Photo by Precondo CA on UnsplashThe initial allocation will focus on tokens tied to newer projects in areas such as artificial intelligence, RAW-to-chain infrastructure, and token–equity hybrid models. Further deployments will be evaluated over time and will remain subject to additional board approval, according to the statement. The policy will be implemented under the oversight of Sav Persico, who was recently appointed chief operating officer. Token Cat said he brings decades of experience in technology and blockchain-related businesses and emphasized that the initiative reflects a long-term approach to digital assets rather than a speculative trade. China’s regulation and softer DAT inflowsToken Cat’s decision comes even as China’s central bank continues to stress that crypto-related business activity remains off-limits domestically. According to Reuters, the People’s Bank of China (PBOC) recently reiterated that services involving virtual assets constitute “illegal financial activities” and highlighted that cryptocurrencies do not have the legal status of fiat currency. The statement was issued against the backdrop of what the central bank characterized as a renewed pickup in speculative crypto trading and broader concerns about financial risks. Beyond China, Token Cat’s move fits into a wider trend of companies experimenting with so-called digital asset treasuries (DATs), in which companies commit varying portions of their balance sheets to crypto. Those strategies, however, have seen softer momentum in recent months. Cointelegraph, citing data from DefiLlama, reported that DATs drew about $1.32 billion in fresh capital in November, the lowest monthly intake of 2024. Bitcoin-focused DATs accounted for the bulk of that activity with roughly $1.06 billion of inflows, while Ethereum-based DATs saw about $37 million in outflows. Bitwise chief investment officer Matt Hougan said on X that DATs have generally moved in tandem over the past six months, but he expects that pattern to change as investors begin to differentiate between firms with clearly articulated strategies and those without. He said a limited number of DATs could emerge with more resilient valuations, while others may continue to trade at persistent discounts. Biotech Sonnet advances HYPE-token planDespite the recent slowdown in inflows, new corporate efforts to gain exposure to digital assets continue. One example is Sonnet BioTherapeutics Holdings, a North Carolina–based biotechnology company developing immuno-oncology drugs. On Dec. 2, Sonnet said its shareholders had approved a proposed business combination with Hyperliquid Strategies Inc. (HSI) and Rorschach I LLC. That vote followed an agreement reached in July for Sonnet to merge with Rorschach to form Hyperliquid Strategies, a new entity expected to hold roughly 12.6 million HYPE tokens valued at about $583 million, along with at least $305 million in cash, for a projected combined value of $888 million. Hyperliquid is a decentralized exchange (DEX) built on its own layer-1 blockchain. Its native token, HYPE, has a total supply of one billion and is used for network governance, staking, and smart contract functions on HyperEVM, the platform’s EVM-compatible environment. Sonnet’s move, together with Token Cat’s newly adopted investment policy, adds to a steady stream of corporate initiatives testing the role of digital assets in balance-sheet management. With companies ranging from biotech firms to automotive marketplaces exploring similar strategies, the coming months will show whether crypto holdings can establish themselves as durable components of corporate treasuries. 

Wallets belonging to the defunct Japanese Bitcoin exchange Mt. Gox have transferred over 140,000 Bitcoin (BTC), valued at approximately $9 billion, to an unknown address.  Sell-off fearsThis significant movement began in the early hours of Tuesday morning in Asia, marking the first such transfer from Mt. Gox’s cold wallets in over five years. Julio Moreno, head of research at CryptoQuant, initially confirmed that 12,239 Bitcoin had been transferred from Mt. Gox over the course of an hour. A short time later, he provided an update on X, stating:"All coins have been transferred to a new address." Despite market disquiet, the prevailing view which subsequently emerged is that the transfer is believed to be part of a plan to distribute assets back to creditors before the October 31, 2024 deadline. Alex Thorn, head of research at Galaxy Digital, shared his perspective on X, suggesting that most of the transferred Bitcoin would likely be held by creditors rather than being sold on the open market. Despite these reassurances, the market reacted negatively for a time. Bitcoin's price dropped by 1.4% since the start of Asian trading hours, falling to a low of $67,680 from a Monday high of over $70,000.Photo by Kanchanara on UnsplashNo Bitcoin FiresaleTo quell fears of a massive Bitcoin sell-off, Mark Karpeles, the former CEO of Mt. Gox, addressed the situation on X. He stated: “As far as I know, everything is fine with MtGox. The trustee is moving coins to a different wallet in preparation for the distribution that will likely happen this year. There is no imminent sale of bitcoins happening." Rehabilitation trustee Nobuaki Kobayashi also issued a press release, clarifying that no sale of Bitcoin or Bitcoin Cash (BCH) had taken place. He assured that the group was "managing bitcoin and bitcoin cash in a secure manner." Wallet activity reveals that these movements were executed through thirteen transactions. A test transaction worth $3 was made on May 20, followed by another smaller transaction of $160 early Tuesday. The remaining transactions varied from $1.2 million to $2.2 billion worth of Bitcoin. Bitinfocharts data shows that all of Mt. Gox's Bitcoin has now been consolidated into a single wallet. A long road to repaymentIn September 2023, Mt. Gox’s trustee announced that the repayment deadline had been extended by 12 months to October 31, 2024. It looked like repayments were imminent in November. However, those communications referenced cash repayments rather than the distribution of Bitcoin and Bitcoin Cash. Some cash repayments had started in December 2023. Speculation in January that the bankruptcy estate would begin the distribution of Bitcoin led to market fears of the impact that would have on the Bitcoin unit price. The extension provided a longer timeframe for preparing the distribution of assets to creditors. Mt. Gox, launched in 2010, quickly rose to prominence, becoming the largest Bitcoin exchange by 2013, handling 70% of all Bitcoin trades worldwide. However, the exchange faced a dramatic downfall in early 2014.  It suspended trading and stopped all withdrawals after losing hundreds of thousands of Bitcoin in a hack. Subsequently, the site went offline, and the company filed for bankruptcy protection after losing over 800,000 Bitcoins. Creditors have been waiting for repayment ever since.