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What happened

On Wednesday, many altcoin investors got back to that late-2022 sentiment, and the feeling was hardly pleasant. Reflecting the typical trajectory of this period, a handful of top altcoins saw notable declines during the day.

For example, late afternoon, same corner Dogecoin (CRYPT: DOGE) decreased by almost 4% in the last 24 hours, Peas (CRYPTO: DOT) had fallen by more than 6%, and Chronos (CRYPTO: CRO) fell by 9%. A bubbly rally in top cryptos has been the drag on most coins and tokens.

So what

There is nothing like major government action to put a stop to a gathering. Sure enough, the Ministry of Justice announced that it had arrested Anatoly Legkodymov, the founder of the crypto exchange Bitzlato, for alleged unlicensed money transmission. This followed an announcement that the DOJ had major crypto regulatory enforcement news to report, which spooked the market.

At a press conference on Legkodymov’s arrest, U.S. Attorney Breon Peace said “institutions that trade in cryptocurrency are not above the law and their owners are not beyond the law. our reach”. In other words, developers and crypto exchanges, watch your back because we are watching you.

No one accuses Dogecoin, Polkadot or Cronos of similar misdeeds involving vast piles of funds. But the DOJ’s bustling arrest and ensuing press conference represent another blow to the reputation of cryptocurrencies. They continue to be associated with criminals, which does little to cheer investors up about their viability.

Now what

It’s too early to tell if this killed off the recent cryptocurrency rally entirely. My guess is they’ll rebound fairly quickly, as many investors have been buoyed by recent macroeconomic developments – and the consequent possibility that the Federal Reserve will halt its interest rate hikes before long. This would benefit investments considered relatively speculative, such as digital coins and tokens.

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