Three crypto companies and 15 individuals have been charged with extensive fraud and market manipulation. This follows an unprecedented investigation by the US Federal Bureau of Investigation (FBI), which involved creating a new digital token to help expose criminal activity in the sector.
Federal prosecutors in Boston announced charges against Gotbit, ZM Quant, and CLS Global, as well as their leaders and employees. This led to four arrests, five guilty pleas, and the seizure of over $25 million in crypto.
Acting US Attorney Joshua Levy highlighted that the defendants engaged in sham trades to artificially inflate trading volumes of various tokens, ultimately leaving innocent investors “holding the bag.”
According to the report by the South China Morning Post, Levy characterized the case as a blend of modern technology and traditional fraud, specifically referencing a “pump and dump” scheme that has long plagued financial markets.
As part of the investigation, the FBI established a crypto company called NexFundAI, which operated a token on the Ethereum blockchain that ZM Quant, CLS Global, and another firm, MyTrade, agreed to manipulate. This token was closely monitored to prevent retail investors from buying it before trading was disabled.
The Securities and Exchange Commission (SEC) has also filed related civil cases. Among the companies charged was Saitama, whose market value soared to $7.5 billion primarily due to the manipulation of its tokens by its leadership, including CEO Manpreet Singh Kohli, who was arrested in the UK.
Meanwhile, Gotbit’s CEO, Aleksei Andriunin, was apprehended in Portugal, while two of his company’s employees in Russia were also charged as part of the ongoing investigation. Federal prosecutors in Boston outlined that from 2018 to 2024, Gotbit engaged in “wash trading” and other manipulative practices on behalf of crypto clients in a bid to boost token trading volumes.
Several other individuals involved in market-making operations, including Liu Zhou and Riqui Liu, have also been charged.
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