The United States of America is currently prosecuting three cryptocurrency companies and 15 individuals for alleged cryptocurrency fraud.
The three cryptocurrency firms and 15 people are charged with extensive fraud and market manipulation following an investigation that saw the Federal Bureau of Investigation (FBI) take an unprecedented step, creating a new digital token to aid in uncovering the criminal activity, Reuters reports.
It was reported that federal prosecutors in Boston announced charges against the companies Gotbit, ZM Quant, and CLS Global, along with their leaders and employees.
The investigation has resulted in four arrests, five people agreeing to plead guilty, and the seizure of more than $25 million in cryptocurrency.
Acting U.S. Attorney Joshua Levy, reportedly described how the defendants orchestrated “sham trades” to artificially inflate the trading volume of various tokens, only to sell them off, leaving innocent investors with devalued assets.
“This case combines new-age technology—crypto—with an age-old fraud, a ‘pump and dump’ scheme, which has been around since the stock market’s early days,” Reuters quoted Levy as saying.
As part of the investigation, the FBI set up a cryptocurrency company, NexFundAI, and launched a token on the Ethereum blockchain.
Prosecutors allege that ZM Quant, CLS Global, and another firm, MyTrade, conspired to manipulate the token’s market.
Trading was carefully monitored to prevent retail investors from purchasing it before trading was eventually disabled.
The U.S. Securities and Exchange Commission (SEC) also filed related civil cases.
Prosecutors revealed that Saitama, one of the largest companies involved, had reached a market value of $7.5 billion before its leadership engaged in trading manipulation and secretly sold off tokens.
Manpreet Kohli, Saitama’s CEO, was arrested in the United Kingdom on Monday. Five other current or former employees have been charged, with three already pleading guilty.
Aleksei Andriunin, CEO of Gotbit, a cryptocurrency “market maker,” was arrested in Portugal on Tuesday.
Two employees of Gotbit in Russia were also charged. From 2018 to 2024, Gotbit allegedly engaged in “wash trading”—a deceptive practice of trading tokens between accounts to create a false impression of market activity—and market manipulation for clients looking to inflate the trading volume of their tokens.
Additional individuals charged include Liu Zhou, founder of MyTrade, who has agreed to plead guilty, and Riqui Liu and Baijun Ou, both employees of ZM Quant, as well as Andrey Zhorzhes from CLS Global.
They, along with Michael Thompson of VZZN and Bradley Beatty of Lillian Finance, were charged with fraudulent activities related to cryptocurrency promotions.