Why crypto market is turning negative?
Events in the cryptocurrency market this past week have led to a sizeable and comprehensive loss of value across all major cryptocurrencies. Challenges daunting the market range from high-profile arrests to security breaches, regulatory actions, and scandals. So here are the reasons behind this trend, explained.
Detention of Telegram CEO Pavel Durov in France
Pavel Durov, CEO and founder of Telegram, was arrested in France on August 24th. This event made waves in the tech and crypto communities since Telegram was a huge platform for conducting business with cryptocurrency. Durov was reportedly held at gunpoint by police in pajamas on the tarmac of Le Bourget airport near Paris after authorities accused Telegram of being used to facilitate serious crimes including terrorism, money laundering, drug trafficking and crime against minors.
The app (Telegram) has more than 700 million active users worldwide, and the arrest could hang over its future. It is a communications platform that provides encryption for chat and many other services, is widely used in the crypto sector as well, and is becoming an important player when it comes to decentralized communication. More jaundice towards, which fears for both privacy and operational continuity following the arrest of its leader.
The Telegram app is under government investigation in India
Not only Durov had to fight with the law in France but also investigate Telegram operations in India. India, the largest South-Asian country, is one of Telegram’s biggest markets, with over 200 million users. The investigation concentrates on the ever possible role that Telegram played in executing criminal activities, including fraud and cybercrime.
It is extremely worrying that this one-two punch of international legal challenges now threatens the platform’s freedom to operate and its users’ trust in it.
Extended Detention of Pavel Durov
After his arrest, Pavel Durov was ordered to be held in France until at least August 28, 2024. This extension means that his crimes are very grave, and such an investigation could probably find the trail of other offenses. French law permits authorities to hold terrorism suspects for questioning without charge for up to 96 hours, with prior approval from a court.
And that time frame could be expanded by another judge’s order. The long detention provides a concrete example that the charges are being investigated thoroughly.
Thai Authorities raided an illegal Bitcoin mine
Crypto industry was further hit after Thai regulatory bodies seized an illicit Bitcoin mining operation that had installed equipment, causing power cuts in the area. The mining operation used 3.5 megawatts, enough to power about 3,000 homes standby.
These raids come at a time when the role of unauthorized mining has increasingly become mainstream news because they both deplete local power resources and turn public sentiment against cryptocurrencies as environmentally responsible.
Polygon Discord Channel Hacked
Companies are still worried about security. In a recent incident, the Discord channel of blockchain giant Polygon was brought down by an attacker. With the credit card scandal, more than 50k users were at risk of phishing and chipping in with a huge amount of user trust.
The same hack of this Polygon’s channel again highlights that even the most trusted name within the area is not immune, and questions were raised about the strength of a security protocol throughout this crypto realm in symmetrical terms.
Motion to Dismiss SEC Lawsuit Against Kraken Denied by Court
And the regulatory atmosphere for cryptos is rapidly tightening up. U.S. court has recently refused to dismiss charges from the Securities and Exchange Commission (SEC) against Kraken Miners. The suit claims that Kraken sold unregistered securities of its products—staked tokens—and that this is against US law.
The case forms a wider regulatory investigation in which over $2 billion worth of fines and settlements have been slapped on different crypto entities last year alone. Legislative mist swirling around major exchanges like Kraken feeds into the overall above-it-all tone of uncertainty and caution among investors.
$4Bn Crypto Scam: OmegaPro Co-Founder Arrested
Ongoing macroeconomic uncertainties, along with the arrest of a $4 billion cryptocurrency scam by the co-founder of OmegaPro, have further soured prospects for legitimacy within the crypto space. After all, OmegaPro sold returns on investments (ROI) that most probably never existed in the traditional shell of Ponzi and robbed all the investors. The case is only the tip of the iceberg in respect to crypto frauds that have affected millions.
Through a deep list worth of $10 billion in total system losses from 2023, ever for frauds belonging to cryptocurrency industry. These high-profile scams are boosting a generally briefer thought of the industry and tearing down trust in crypto too.
In the end, between these things going to shit has made an unstable circumstance for cryptocurrency markets. Arrests, regulation clampdowns, and security breaches as well as high-profile scams are creating a perfect storm of adversity that hugely dampens investor confidence.
For the market to bounce back, it will not be simple and easy, but all players need: Enhanced regulatory conformity Thicker security steps More open & more trust building in seriousness for the markets to recover. For any kind of industry to mature, it has no choice but to deal with these issues up front, which affect its long-term prospects and potential for growth.
