Arrests Made in Crackdown on Crypto Fraud Network by US Authorities
The United States government has taken action against a group involved in cryptocurrency fraud and manipulation, charging three market makers and 18 others. The Federal Bureau of Investigation (FBI) led the investigation by devising a plan and developing a digital token called NextFundAI to track the suspected individuals’ activities.
As a result of the investigation, four companies, including Gotbit, ZM Quant, CLS Global, and MyTrade, were indicted for engaging in widespread cryptocurrency fraud and manipulation.
Expressing his satisfaction with the operation, U.S. attorney Joshua Levy described the investigation as unprecedented and emphasized that misleading investors through false statements constitutes fraud in the cryptocurrency market, just as it does in traditional financial markets.
“This investigation, the first of its kind…Wash trading has long been outlawed in the financial markets, and cryptocurrency is no exception. The message today is, if you make false statements to trick investors, that’s fraud. Period.”
Additional Individuals Implicated in Crypto Fraud
The investigation revealed that the market makers were providing ‘market manipulation-as-a-service,’ a scheme that involved boosting token trading volumes and then offloading tokens once more investors joined the artificially inflated market.
Prosecutors highlighted the Saitama token, which reached a market cap in the billions, as an example of this pump-and-dump tactic.
As a result of the probe, a total of 18 individuals, including the leaders of the market makers, their staff, and promoters of the fraudulent tokens, were implicated.
Notably, Gotbit, known for its extensive involvement with memecoins, is one of the prominent market makers under scrutiny.
The CEO of Gotbit, Aleksei Andriunin, an active former Twitter user, was previously flagged by ZachXBT, a well-known blockchain investigator.
Other figures such as ZM Quant’s Riqui Liu and Baijun Ou, CLS Global’s Andrey Zhorzhes, and Liu Zhou from MyTrade were also among those indicted.
Reportedly, the U.S. government has seized $25 million and shut down multiple trading bots used for wash trading.
Despite this, individuals affected by NextFundAI or the tokens mentioned in the investigation, such as Robo Inu, are set to receive refunds.
Nevertheless, the charges have caused some unrest among social media influencers and cryptocurrency promoters. Ansem, a prominent crypto influencer and supporter, hinted at the possibility of ‘retiring’ his account in response to the developments.