Federal prosecutors recently charged three crypto companies and 15 individuals with widespread fraud and market manipulation following an investigation that involved the creation of a new digital token by the FBI. Among the companies charged were Gotbit, ZM Quant, and CLS Global, along with their leaders and employees. The crackdown led to four arrests, five plea agreements, and the seizure of over $25 million in cryptocurrency. The companies were accused of engaging in wash trading to artificially inflate token prices and then selling them in a “pump and dump” scheme.
Saitama, the largest of the crypto companies involved, saw its chief executive, Manpreet Kohli, and five other current or former employees charged in the case. Aleksei Andriunin, CEO of Gotbit, along with two of his employees in Russia, was also charged in connection with wash trading and market manipulation activities that inflated trading volumes for their tokens. The investigation revealed a scheme where false statements were used to deceive investors, leading to fraudulent practices in the crypto market.
The companies allegedly hired “market makers” to engage in wash trading their tokens for payment, exploiting buyers and manipulating trading volumes. The FBI’s involvement in creating a token called NexFundAI as part of the investigation revealed the extent of market manipulation carried out by firms like ZM Quant, CLS Global, and MyTrade. The Department of Justice’s operation, named “Token Mirrors,” uncovered the illegal activities of these companies and their associates, leading to charges against several individuals for market manipulation services.
Individuals charged in the case include founders and employees of various cryptocurrency market makers, such as Liu Zhou, Riqui Liu, Baijun Ou, and Andrey Zhorzhes. These individuals were involved in wash trading and manipulating trading numbers to deceive investors and inflate trading volumes. Additionally, Michael Thompson of Virginia, who worked at a crypto company called VZZN, and Bradley Beatty of Florida were also charged for their fraudulent activities related to promoting crypto companies and engaging in market manipulation.
The charges brought by federal prosecutors highlight the growing concern over fraud and market manipulation within the cryptocurrency sector. The collaboration between law enforcement agencies like the FBI and the Department of Justice aims to crack down on illegal activities that undermine the integrity of the market. By creating a new digital token for investigative purposes, authorities were able to uncover a network of companies and individuals involved in fraudulent practices, ultimately leading to arrests, plea agreements, and the seizure of significant amounts of cryptocurrency.
The message from Acting US Attorney Joshua Levy emphasized the importance of transparency and honesty in the cryptocurrency industry, warning that those who engage in fraudulent activities will face legal consequences. The cases brought against the crypto companies and individuals involved in market manipulation serve as a deterrent to others who may be considering similar schemes. Moving forward, regulatory oversight and enforcement efforts will continue to play a crucial role in maintaining trust and integrity in the cryptocurrency market, protecting investors and ensuring fair and transparent trading practices.
