SEC exposes massive cryptocurrency market manipulation scheme

U.S. authorities, including the Securities and Exchange Commission (SEC), Federal Bureau of Investigation (FBI), and Department of Justice (DOJ), have accused Gotbit and four other crypto companies of widespread market manipulation.

Several people working for a criminal organization were also arrested on this charge.

Market Maker Accused of Operating Wash Trading Scheme

According to a statement released by the SEC on October 9, Gotbit, ZM Quant, CLS Global, and MyTrade MM used bots to inflate trading volumes on centralized exchanges (CEX) through wash trading.

A parallel statement from the Massachusetts U.S. Attorney's Office also included charges against popular meme coin projects Saitama and RoboDog.

The SEC alleges that the named companies engaged in a “pump-and-dump” scheme in which they misrepresented the value of certain tokens to encourage new investors to buy them and cash out at inflated prices.

In total, law enforcement officials seized $25 million in virtual currency. Additionally, we disabled a bot responsible for millions of fraudulent transactions across 60 different crypto assets.

Saitama prefecture officials named in the complaint

Celebrities named in the investigation include Russell Armand, Maxwell Hernandez and Manpreet Kohli. They and their colleagues in Saitama Prefecture, Nam Tran and Vi Pham, are accused of using Gotbit and ZM Quant to provide market manipulation services, including generating false trading volumes for various cryptocurrencies. has been accused.

Kohli and Tran face additional charges of conspiracy to commit wire fraud and operating an unauthorized money transfer business.

According to the U.S. Attorney's Office, Mr. Armando and Mr. Hernandez have already pleaded guilty to the very same charges levied against Mr. Kohli and Mr. Tran. Pham, who is based in California, also confessed to engaging in illegal activities at Saitama and another unnamed cryptocurrency company.

Others indicted in Boston's Federal District Court include Gotbit's Alexei Andriunin, Fedor Kedrov, and Kawi Jalili, and ZM Quant's Riki Liu and Baijun Ou.

An investigation that began in 2017 revealed that the suspects used bots to create quadrillions of fake transactions, with daily artificial transactions amounting to billions. These activities led unsuspecting retail investors to purchase tokens at inflated prices, but when Gotbit and the co-accused companies sold their holdings, they suffered huge losses. It was just covered.

A key turning point in the investigation came when the FBI created a cryptocurrency called NexFundAI to access the inner workings of market-making companies.

NexFundAI is still actively traded at the time of this writing, has a market capitalization of approximately $237,000, and was designed to look like a legitimate project that brings together cryptocurrencies and AI. It appeared to work as intended and attracted market manipulators who believed they could exploit it.