Federal Prosecutors Charge Three Crypto Companies and 15 Individuals in Fraud and Market Manipulation Scheme
On Wednesday, federal prosecutors announced charges against three Cryptocurrency companies and 15 individuals for engaging in widespread fraud and market manipulation. This crackdown follows an investigation where the FBI introduced a new Digital Token to uncover criminal activities for the first time.
The companies implicated in the scheme include Gotbit, ZM Quant, and CLS Global, along with their leaders and employees. As a result of the investigation, four arrests were made, and five plea agreements were reached. Additionally, authorities seized over $25 million worth of Cryptocurrency.
According to federal allegations, the accused companies participated in wash trading activities to artificially inflate token prices, ultimately attracting new investors. Subsequently, the defendants engaged in a "pump and dump" scheme by selling the tokens at inflated prices.
Top Executives from Saitama and Gotbit Arrested
Saitama, one of the largest companies involved in the fraud, saw its market value reach billions at one point. The CEO of Saitama, Manpreet Kohli, was arrested in the United Kingdom on Monday, along with five other current and former employees who are facing charges, three of whom have pleaded guilty.
Another key figure in the case is Aleksei Andriunin, the CEO of Gotbit, a Crypto market maker residing in Russia and Portugal. He was arrested in Portugal on Tuesday, along with two of his employees in Russia. Prosecutors allege that from 2018 to 2024, Gotbit engaged in wash trading to artificially inflate trading volumes for various cryptocurrencies.
Acting US Attorney Joshua Levy commented on the case, emphasizing that those who deceive investors with false statements will face Legal consequences. He highlighted the convergence of traditional fraudulent schemes with innovative technologies like cryptocurrency in these cases.
Crypto Companies Allegedly Employed Market Makers to Exploit Buyers
The implicated crypto companies reportedly hired market makers to conduct wash trading on their behalf in Exchange for Payment. One market maker who agreed to plead guilty described the objective as making other buyers lose money to generate profits on the secondary markets.
FBI’s Fake Token and Market Manipulation Charges
The FBI's token, NexFundAI, was created as part of the "Operation Token Mirrors" investigation, revealing instances of wash trading by ZM Quant, CLS Global, MyTrade, and Gotbit. The latter's CEO and two directors were charged for their involvement in similar schemes.
Other individuals charged in connection to market manipulation services include Liu Zhou, the founder of MyTrade, as well as Riqui Liu and Baijun Ou from ZM Quant, Andrey Zhorzhes of CLS Global, Michael Thompson from VZZN, and Bradley Beatty from Lillian Finance.
These charges mark a significant crackdown on fraudulent activities within the cryptocurrency industry and serve as a reminder that legal authorities are actively monitoring and pursuing offenders.
