FBI Charges 14 People in Historic Crypto Fraud Case Involving Four Firms | $25M Seized
FBI's sting operation leads to charges against 14 individuals and 4 crypto firms for market manipulation, seizing $25M in assets in the first case of its kind
U.S. federal authorities have charged 14 individuals and four cryptocurrency companies, accusing them of creating schemes to manipulate crypto markets. This is the first big case of its kind in the digital asset space, showing that the government is taking serious steps to crack down on illegal activities in the cryptocurrency industry.
The U.S. Department of Justice (DOJ) confiscated over $25 million worth of cryptocurrency in an unusual sting operation. The FBI used a fake digital token, NexFundAI, to catch the suspects, making it the first time such a tactic has been used.
The companies involved—Gotbit, ZM Quant, CLS Global, and MyTrade—are accused of engaging in "wash trading." This is when companies create fake trading activity to falsely boost the prices of digital tokens, tricking investors into buying them. Once the prices go up, the firms allegedly sell off their holdings, leaving investors with losses. This is commonly known as a "pump and dump" scheme.
The FBI’s Operation Token Mirrors
The FBI’s operation, called "Operation Token Mirrors," focused on the fake token NexFundAI. Authorities claim that ZM Quant, CLS Global, and MyTrade manipulated trading volumes to make it look like this token was in high demand, making it more appealing to potential buyers.
One of the key individuals charged is Aleksei Andriunin, the 26-year-old CEO of Gotbit. He was arrested in Portugal and is awaiting extradition to the United States. In 2019, Andriunin reportedly bragged about making money by faking trading volumes on crypto exchanges. His company, Gotbit, marketed itself as a hedge fund and meme coin expert, with connections to Russia.
Another crypto project, Saitama, was also mentioned in the case. It allegedly manipulated its token to reach a market value of $7.5 billion, while its operators secretly sold off their tokens, making tens of millions in profit.
Authorities Step Up to Protect Investors
U.S. Attorney Joshua Levy emphasized that even though cryptocurrency is new, illegal practices like wash trading are not allowed. "Wash trading has been banned in traditional financial markets for a long time, and the same rules apply to cryptocurrency," Levy said.
The Securities and Exchange Commission (SEC) is pushing for strict penalties against Gotbit, Andriunin, and others involved, demanding they return all the money they earned through these illegal practices.
This case sends a clear message to both crypto companies and investors: the authorities are watching, and fraud in the digital currency space will not be tolerated. While cryptocurrency may be relatively new, the need for fairness and transparency in financial markets is as important as ever.
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