In the latest crackdown, federal prosecutors have filed charges against three cryptocurrency firms and fifteen people. In this investigation, the FBI found extensive amounts of market manipulation. This case was the first time the FBI created a digital token with the ultimate aim of uncovering scandals in the cryptocurrency market.
Companies Involved in Manipulation
The firms involved in the scheme are Gotbit, ZM Quant, and CLS Global. The prosecutors said that these companies employed fictitious trading strategies to pump up the value of crypto tokens. Such manipulation created the investors’ perception that these tokens have sustainable demand. This was carried out by Gotbit, an AR app developed by Aleksei Andriunin and others, the initiators of the operation. Andriunin was arrested in Portugal, while two more staff members, Fedor Kedrov and Qawi Jalili, based in Russia, were also charged.
ZM Quant and CLS Global also participated in illegal activities. They agreed to manipulate a token created by NexFundAI, a company set up by the FBI. Authorities monitored the trading of this token to reduce the risk to retail investors. Before the manipulation could harm anyone, token trading was disabled.
FBI Reports $5.6 Billion Lost in 2023 Crypto Fraud CasesExecutives and Employees Face Charges
Manpreet Kohli, CEO of Saitama, was arrested in the United Kingdom. Prosecutors say Saitama’s leadership inflated the value of their tokens to a market valuation of $7.5 billion. Kohli and several executives secretly sold their tokens for profit, leaving investors with worthless assets. Five employees of the company were charged, with three agreeing to plead guilty.
Several other individuals from market-making firms were also charged. Liu Zhou, the founder of MyTrade, and employees from ZM Quant and CLS Global were implicated. Notably, Liu Zhou has agreed to plead guilty.
Ongoing Legal Action
The investigation of this fraud, which began in March 2018, has led to the arrest of four people so far. Over $25 million in Virtual Currency has been taken away from criminals. The U.S. Securities and Exchange Commission (SEC) has also instituted civil cases supported by the charges.
Authorities are using new techniques, such as the creation of NexFundAI, to uncover fraud in the crypto industry. The defendants now face serious legal consequences. The investigation is ongoing as prosecutors aim to prevent future crimes in the evolving digital asset market.
