The U.S. Department of Justice (DOJ) took a page out of a certain crypto-hype-man's book Wednesday when announcing an announcement. And following the age-old tradition, the news eventually disclosed was, at least on the surface, a bit of a nothingburger.

Given everything that has happened in crypto recently n the collapse of major crypto exchange FTX, the destabilization of crypto conglomerate (and CoinDesk parent) Digital Currency Group and even the disclosure of a massive, multi-year investigation into Binance, the worldrs largest exchange by volume n the DOJrs initial announcement piqued peoplers attention. The cryptocurrencies bitcoin (BTC) and ether (ETH) both fell by about 5% after the initial announcement.

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But when the regulators and enforcers took the stage at noon Eastern time to announce they had shut down the little-known crypto exchange Bitzlato and arrested its founder in Miami, the whole charade looked like a waste of taxpayer money. What is a Bitzlato?

Tellingly, authorities misspelled the name of the exchange when uploading court documents. lKinda feels like they heard about this exchange for the first time today too,r crypto researcher and critic Bennett Tomlin, who noted the anomaly, tweeted.

See also: Bitz Who Now? Department of Justice Takes Down Russian Exchange Bitzlato | Podcast

Bitzlato is a crypto exchange registered in Hong Kong and run by the Russian national Anatoly Legkodymov (who also goes by lGandalfr). The indictment claimed the exchange processed about $4.5 billion worth of crypto currency transactions since its founding in 2018, of which $700 million is known to have flowed to or from the prominent ldarknet marketplacer Hydra. Further, a lmeaningfulr volume allegedly came from U.S. customers n meaning it would be subject to lU.S. regulatory safeguards.r

The multi-agency investigation n including the DOJ, Federal Bureau of Investigation (FBI) and Treasury Department in conjunction with about half a dozen European agencies n allegedly found that the lmoney transmitting businessr Bitzlato was operating with minimal know-your-customer (KYC) oversights and was used to launder money from illicit sources including ransomware and drug trafficking.

Legkodymov allegedly was aware that his exchange was used by what he called lcrooksr and even advertised it as such. If convicted of operating an illegal money transmitting business, Legkodymov faces a maximum sentence of five years.

Of course, few had heard of Bitzlato or its operator Gandalf before the press conference, reminiscent of how, in 2011, Sen. Chuck Schumer (D-N.Y.), now the Senate Majority Leader, inadvertently turned a lot of people onto the legendary darknet market Silk Road (and bitcoin!) when calling for its closure.

That doesn't necessarily mean Bitzlato was not lthe China-based money laundering engine that fueled a high-tech axis of cryptocrime,r as the FBI alleges. After all, darknet transactions are supposed to be secretive. But at its height, the exchange only held $6 million in funds n a remarkably miniscule amount. Likewise, similar Web searches show how little traffic the so-called crime hub had.

All of this raises the question of why the agencies would grandstand about what seems like relatively straightforward police work.

In the words of Deputy Attorney General Monaco, lTodayrs actions send the clear message: Whether you break our laws from China or Europe n or abuse our financial system from a tropical island n you can expect to answer for your crimes inside a United States courtroom.r

Taken at face value, the suggestion is that the police are going to police and that, while the crypto industry may be global and ldecentralized,r much of that investigatory work is going to start and end in the U.S. This isnrt anything new. The superpower isnrt called the lworldrs policemanr for nothing. Likewise, the llong arm of the lawr has wrangled in a number of offshore companies over the years.

Still itrs a strong statement n and that might send shivers down Binance CEO Changpeng Zhaors spine. Bitzlators top counterparty was Binance, (followed by Hydra and an alleged Ponzi scheme called lFinikor).

Industry news site Protos suggested that the Bitzlato investigation was likely kick-started, or accelerated, by the seizure of documents from the Hydra marketplace last year. If that were true, it means the DOJ, which is reportedly already investigating Binance, would have similar data on flows between Binance and Hydra. According to research done by NBERrs Igor Makarov and Antoinette Schoar in 2021, Bitzlato was the second-largest source of Hydrars volumes after Binance (and above the peer-to-peer network LocalBitcoins).

This isnrt to paint a target on Binance n critically, the exchange has boosted its KYC procedures and relationships with regulators over the years. But itrs clear from CoinDesk reporting that the Securities and Exchange Commission is interested taking a look under the hood at the industryrs biggest exchanges, and Binance is still reportedly staring down a money laundering complaint. If and when that comes no one should be surprised if Hydra is named.

If anything, yesterdayrs indictment only proved that regulators and police have the tools necessary at their disposal to investigate and indict alleged crypto criminals. Thatrs worth mentioning in the wake of FTX, and other high-profile blockchain embarrassments last year, now that lawmakers are calling for stricter rules and oversight of the industry.

See also: Binance Named as Counterparty in FinCEN Order Against Bitzlato

According to the Washington Post, the Bitzlato enforcement was the first action led by the Justice Department's crypto-focused "NCET" team started in 2021. It was also an opportunity for the U.S. Treasury Dept.'s Financial Crimes Enforcement Network to debut more powers granted by a 2021 defense authorization law to combat Russian-related financial crimes, including bypassing slower procedures to administer punishments by fiat.

Therers an argument to be made that oversight of monetary transfers is already overly broad n it penalizes everyone by starting from the premise that surveillance for the sake of safety is normal. But ever since the seizure of the Silk Road, it has been evident that fully public, transparent and immutable blockchains are horrible systems to do illicit business on n and yet people choose to do so. The crimes are there, the laws are on the books.

Thatrs part of what made yesterdayrs presser so cringey. In particular, Monacors allusion to the ltropicalr Bahamas-based FTX exchange n when discussing the broad authority for U.S. agencies to pursue crimes n only goes to show how often regulators fail to preempt anything. Bitzlato may have been an exception, but it pales by comparison.