US prosecutors indict more than 10 cryptocurrency market operators on charges of market manipulation
On October 9, 2024, U.S. federal prosecutors indicted four cryptocurrency companies and more than 10 of their associates for engaging in cryptocurrency fraud and market manipulation.
District of Massachusetts | Eighteen Individuals and Entities Charged in International Operation Targeting Widespread Fraud and Manipulation in the Cryptocurrency Markets | United States Department of Justice
SEC.gov | SEC Charges Three So-Called Market Makers and Nine Individuals in Crackdown on Manipulation of Crypto Assets Offered and Sold as Securities
US charges 3 companies, 15 people with cryptocurrency fraud | Reuters
https://www.reuters.com/legal/us-charges-18-people-companies-cryptocurrency-fraud-2024-10-09/
On October 9, 2024, federal prosecutors in Boston, USA, indicted four financial services companies, Gotbit, ZM Quant, CLS Global, and MyTrade, and their associates. The defendants are said to have used a technique called ' pump and dump ,' which involves artificially inflating the trading volume of various virtual currency tokens and then selling them in fake transactions. According to the prosecution, in the defendants' largest 'pump and dump,' the virtual currency token of a company called ' Saitama Inu ' temporarily reached a market capitalization of $7.5 billion (approximately 1.11 trillion yen).
Saitama Inu's CEO, Manpreet Kohli, was arrested in the UK on October 7, 2024, and employees Haroon Mohsini, Nam Tran, Max Hernandez, Russell Armand, and Vie Pham have also been indicted, of which Hernandez, Armand, and Pham have pleaded guilty.
In addition, GotBit CEO Alexei Andryunin, who was based in Russia and Portugal, has been indicted along with market making director Fedor Kedrov and sales manager Kawi Jalili on charges of wire fraud, conspiracy to manipulate markets, and conspiracy to launder money. According to prosecutors, GotBit conducted market manipulation, known as ' wash trading ,' for multiple clients between 2018 and 2024, earning tens of millions of dollars (billions of yen).
Also charged with wire fraud and conspiracy to commit market manipulation were Baijun Ou and Liqi Liu of ZM Quant, Andrei Georges of CLS Global, and Liu Zhou of MyTrade, who advertised market manipulation services to clients.
Also charged are Michael Thompson, who worked for VVZZN, a company founded by a former Saitama Inu employee, and Bradley Beatty, who made false statements to promote his own cryptocurrency company, Lillian Finance.
'Wash trading has long been illegal in financial markets, and cryptocurrencies are no exception,' said Acting U.S. Attorney Joshua Levy. 'This case represents a meeting of a revolutionary technology -- cryptocurrencies -- with a century-old scheme: pump-and-dump fraud. We strongly emphasize that when false statements are made to deceive investors, that is fraud and we will pursue it vigorously.'
'These criminal charges underscore how vigilant retail online investors must be and why it's important to do your homework before jumping on the digital frontier,' Levy said. 'Anyone considering investing in the cryptocurrency industry needs to understand how these scams work and protect themselves.'
Similarly, Sanjay Wadhwa of the US Securities and Exchange Commission advised that 'investors should be aware that purported 'promoters' and self-declared market makers are working together to target retail investors with false promises of profit in the cryptocurrency markets, which could work against them.'
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