Federal prosecutors charged three crypto companies and 15 individuals with fraud and market manipulation cases, resulting in four arrests and five plea agreements.
On Wednesday, federal prosecutors charged three crypto companies and 15 individuals with pervasive fraud and market manipulation. This action results from an investigation in which the FBI, for the first time, developed a new digital token to assist in discovering illicit activities.
In Boston, prosecutors have filed charges against Gotbit, ZM Quant, CLS Global, and the leaders and employees of these and other companies. Four arrests and five plea agreements were the outcome of this operation. Additionally, authorities confiscated cryptocurrency valued at more than $25 million.
It is purported that the companies engaged in wash trading with digital tokens to inflate their prices artificially. This strategy attracted new investors. The defendants subsequently sold their tokens in a “pump and dump” scheme, according to federal allegations on Wednesday.
Top Executives from Saitama and Gotbit have been Apprehended
Saitama, the most significant of these crypto corporations, had a market value of billions at one time. Manpreet Kohli, the organization’s CEO, was apprehended in the United Kingdom on Monday. Additionally, five additional current or former employees were charged, and three have entered guilty pleas.
Aleksei Andriunin, the CEO of Gotbit, a crypto “market maker” based in Portugal and Russia, is also accused. On Tuesday, he was apprehended in Portugal. Additionally, charges were brought against two employees of his organization in Russia.
Prosecutors alleged that Gotbit participated in market manipulation and wash trading on behalf of numerous cryptocurrency clients from 2018 to 2024. This activity contributed to the artificial inflation of trading volumes for their tokens.
It is purported that the crypto companies employed firms, referred to as “market makers,” to facilitate trading their tokens in exchange for payment. A prospective client was informed of the practice by a market maker defendant who consented to a guilty plea.
He stated that the “objective on the secondary markets” is to identify “other buyers from the community, people you are unfamiliar with or not interested in,” as “we must cause [the other buyers] to lose money to make a profit.”
The FBI’s fake token initiates charges of significant crypto market manipulation.
The Department of Justice stated that the FBI developed a token known as NexFundAI as part of its investigation, which was termed “Operation Token Mirrors.”
It was alleged that ZM Quant, CLS Global, and MyTrade conspired to wash the token or laundered it, which means they manipulated trading to make the numbers more appealing. A similar scheme is also being accused of being perpetrated by the CEO, two directors, and a fourth market maker, Gotbit.
Additionally, four individuals employed by cryptocurrency market makers were accused. prosecutors claimed that these individuals advertised market manipulation services to clients.
Among them is Liu Zhou, the proprietor of MyTrade, a market maker. Court documents indicate that he has consented to a guilty plea. Riqui Liu of the United Kingdom and Hong Kong and Baijun Ou of Hong Kong, who both worked at ZM Quant, are also accused. Additionally, Andrey Zhorzhes of the United Arab Emirates, an employee of CLS Global, is implicated.
In addition to Bradley Beatty of Florida, who prosecutors allege fraudulently promoted his crypto company, Lillian Finance, Michael Thompson of Virginia, who worked at a crypto company called VZZN, founded by a former Saitama employee, and others have been charged.
