Lawrence Damilola
Federal prosecutors on Wednesday have charged multiрle crypto companiеs, along with 15 individuals, in a $25 million fraud and market manipulation scheme.
The charges came after an unprecedented FBI-led operation in which the agency created a fake digital token to track criminal activity in the crypto market. Acting U.S. Attorney Joshua Levy revealed details of the case in Boston, noting the arrests of several top executives and the seizure of over $25 million worth of cryptocurrency.
“This is a case where new age technology, crypto, meets an old school fraud,” Levy said. The charges include widespread “pump and dump” tactics, where cryptocurrency prices were artificially inflated through wash trading, before being sold off tо unwitting investors.
The US SEC, FBI, and DOJ sued #Gotbit and other crypto firms for alleged fraud and market manipulation.#Gotbit previously claimed that they sold $WATER to lower the price to a fair level.
However, #Gotbit sold significantly more tokens than purchased!https://t.co/qtYsQvX6OB pic.twitter.com/8OWV5qOnMiRelated: French Couple Robbed of $1M in Bitcoin During Fake Police Raid
— Lookonchain (@lookonchain) October 10, 2024
The FBI’s operation, named “Operation Token Mirrors,” targeted Gotbit, ZM Quant, CLS Global, and other firms that allegedly manipulated trading volumes to inflate the value of various tokens. One of the key tools in the investigation was NexFundAI, a digital token created by the FBI to lure suspects into fraudulent behavior. According to authorities, ZM Quant, CLS Global, and MyTrade conspired to manipulate the token on the Ethereum blockchain, which helped build the case against them.
Among those charged is Manpreet Kohli, CEO of Saitama, a crypto firm that once boasted a market value of $7.5 billion. Kohli was arrested in the UK, and five other current or former employees of Saitama were also charged, with three agreeing to plead guilty. Aleksei Andriunin, CEO of Gotbit, was arrested in Portugal on charges of leading a market manipulation scheme from 2018 to 2024. Prosecutors allege that Andriunin and his team used wash trading to inflate token volumes for several cryptocurrency clients.
“This is about tricking investors,” Levy said during the announcement of the charges, emphasizing the fraudulent nature of the defendants’ actions.
Related: Industry Celebrates the New $70M Domain Mogul But His Crypto Shadows Linger
Other individuals charged include Liu Zhou, founder of MyTrade, who has already agreed to plead guilty, as well as employees from Hong Kong, Russia, and the UAE who worked for ZM Quant and CLS Global. The U.S. Securities and Exchange Commission has also filed related civil suits against the defendants.
Additionally, Michael Thompson from Virginia, associated with a crypto firm named VZZN established by an ex-Saitama staff member, and Bradley Beatty from Florida, accused of deceitfully advertising his cryptocurrencу business, Lillian Finance, were among those indicted.
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LAWRENCE
Lawrence is a cryptocurrency journalist covering blockchain developments and digital assets.
