Federal authorities have charged three cryptocurrency firms and 15 individuals with extensive fraud and market manipulation in a significant investigation that involved the FBI creating a new digital token to aid in uncovering criminal activities.
The U.S. Attorney’s Office in Boston announced that the companies Gotbit, ZM Quant, and CLS Global, along with their leaders and employees, were implicated in a scheme that resulted in four arrests, agreements from five individuals to plead guilty, and the seizure of over $25 million in cryptocurrency.
Acting U.S. Attorney Joshua Levy described the defendants’ actions as a form of market manipulation involving “sham trades” designed to artificially inflate trading volumes of various tokens before liquidating them, ultimately leaving innocent investors at a loss. “This is a case where new-age technology, crypto, meets old-school fraud,” Levy said, referencing the long-established “pump and dump” schemes seen in stock markets.
The investigation revealed that the FBI directed the establishment of a cryptocurrency firm named NexFundAI, which issued a token on the Ethereum blockchain. Prosecutors allege that ZM Quant, CLS Global, and another company, MyTrade, agreed to manipulate the trading of this token. The FBI closely monitored these transactions to limit retail investor exposure before halting trading.
In a related civil case, the U.S. Securities and Exchange Commission also filed charges. Among the companies involved, Saitama reportedly reached a market valuation of $7.5 billion before its leadership manipulated token trades and sold them secretly. The firm’s CEO, Manpreet Kohli, was arrested in the United Kingdom, along with five other current or former employees who face charges, three of whom have already pleaded guilty.
Aleksei Andriunin, CEO of Gotbit, was apprehended in Portugal on Tuesday. Prosecutors allege that from 2018 to 2024, Gotbit engaged in “wash trading” and market manipulation to boost the trading volumes for several cryptocurrency clients.
Additional charges were brought against four individuals associated with cryptocurrency market-making firms accused of providing market manipulation services to clients. Among those charged are Liu Zhou, founder of MyTrade, who is expected to plead guilty, and Riqui Liu and Baijun Ou, both connected to ZM Quant, as well as Andrey Zhorzhes, an employee of CLS Global.
Attempts to reach these individuals for comment have so far been unsuccessful. Others charged include Michael Thompson of Virginia, linked to a cryptocurrency company called VZZN, and Bradley Beatty of Florida, who allegedly misled investors about his crypto venture, Lillian Finance.
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