US Authorities Crack Down on Crypto Fraud: 18 Charged, $25M Seized

Crypto Fraudsters Brought to Justice - 18 Charged, $25M Recovered

“This is a case where new age technology, crypto, meets an old school fraud, in this case a 'pump and dump' scheme...”

Cryptocurrency fraud, where 18 individuals and firms, including Saitama and Gotbit, face charges for market manipulation and sham trading.

The U.S. government has cracked down on cryptocurrency fraud, charging three companies - Gotbit, ZM Quant, and CLS Global - and 15 individuals with widespread fraud and market manipulation. This massive crackdown has resulted in four arrests and five guilty pleas, with over $25 million worth of cryptocurrency seized.

Charges and Investigation

The Federal Bureau of Investigation (FBI) took an innovative approach during the investigation, creating a new digital token for the first time to help solve the crime. Federal prosecutors in Boston led the charges, targeting not only the companies but also their leaders and employees.

Impact and Consequences

The Securities and Exchange Commission (SEC) has been actively protecting investors in crypto markets and from cyber-related threats. In similar cases, the SEC has charged crypto companies, such as SafeMoon and Trade Coin Club, for fraudulent schemes and unregistered offerings. These actions demonstrate the government's commitment to regulating the crypto space and holding perpetrators accountable.

Ongoing Efforts

The SEC's Office of Strategic Hub for Innovation and Financial Technology (FinHub) continues to engage with innovators and entrepreneurs in the financial technology sector, including crypto assets. By combining innovative approaches with regulatory actions, the U.S. government aims to safeguard investors and maintain the integrity of the financial markets.

Acting US Attorney Joshua Levy has announced charges against three cryptocurrency companies and 15 individuals for engaging in widespread fraud and market manipulation. According to Levy, the defendants used sham trades to artificially inflate the trading volume of various cryptocurrency tokens before selling them off, “leaving innocent investors holding the bag.” This case is a classic example of “crypto tech meets old school fraud,” specifically a “pump and dump” scheme, which has been around since the early days of the stock market.

The investigation, led by the FBI, involved the creation of a new digital token to help track down the perpetrators. This innovative approach led to the seizure of over $25 million worth of cryptocurrency and the arrest of several key individuals, including Manpreet Kohli, CEO of Saitama, and Aleksei Andriunin, CEO of Gotbit.

Charges and Arrests

• Four arrests made, including Kohli and Andriunin
• Five individuals have agreed to plead guilty
• Over $25 million worth of cryptocurrency seized

Companies Involved

Gotbit: accused of “wash trading” and market manipulation

ZM Quant and CLS Global: accused of manipulating trading volumes

Saitama: accused of artificially inflating trading volume and secretly selling tokensm

“This is a case where new age technology, crypto, meets an old school fraud, in this case a 'pump and dump' scheme, which is as old as the stock markets,” Levy said.

The US Securities and Exchange Commission (SEC) has filed civil cases related to the cryptocurrency fraud investigation. As part of the probe, the FBI took an innovative approach by creating a cryptocurrency company called NexFundAl, which issued a token on the Ethereum blockchain. Prosecutors alleged that ZM Quant, CLS Global, and MyTrade agreed to manipulate this token.

The investigation has led to charges against three cryptocurrency companies and 15 individuals for engaging in widespread fraud and market manipulation. The defendants allegedly used sham trades to artificially inflate trading volumes, leaving innocent investors with significant losses. The SEC's civil cases are part of a broader crackdown on cryptocurrency fraud, aiming to protect investors and maintain market integrity.

Players Involved:

NexFundAl: The cryptocurrency company created by the FBI as part of the investigation ZM Quant, CLS Global, and MyTrade: Companies accused of manipulating the NexFundAl token

US Securities and Exchange Commission (SEC): Filed related civil cases

Federal Bureau of Investigation (FBI): Directed the creation of NexFundAl and led the investigation

The SEC's actions demonstrate its commitment to regulating the cryptocurrency space and holding perpetrators accountable. By working together with the FBI, the SEC aims to safeguard investors and prevent future fraud.

Prosecutors allege that Saitama, the largest company involved in the cryptocurrency fraud scheme, artificially inflated its market value to $7.5 billion through token manipulation and secret sales by its leadership. At its peak, Saitama's valuation soared to $7.5 billion.

Saitama's CEO, Manpreet Kohli, was apprehended in the United Kingdom on Monday. Additionally, five current or former employees face charges, with three already pleading guilty.

Developments:

Saitama's Market Manipulation: Artificially inflated market value to $7.5 billion

CEO Manpreet Kohli: Arrested in the UK

Employee Charges: Five charged, three pleaded guilty

The investigation and subsequent arrests highlight the ongoing efforts to combat cryptocurrency fraud and protect investors. Regulatory agencies continue to work together to hold perpetrators accountable.

Additional individuals have been charged in the cryptocurrency fraud scheme, including:

• Aleksei Andriunin, CEO of Gotbit, a cryptocurrency market maker with ties to Russia and Portugal. He was arrested in Portugal.
• Two Gotbit employees in Russia.

Prosecutors allege that from 2018 to 2024, Gotbit engaged in:

“Wash trading” (sham trading)

Market manipulation

On behalf of clients, artificially inflating trading volume for their tokens.

Four more individuals face charges:

• Employees of cryptocurrency “market makers”
• Advertised market manipulation services to clients

These charges demonstrate the widespread nature of the fraud scheme and the ongoing efforts to hold perpetrators accountable.

Key Individuals and Companies:

Aleksei Andriunin (Gotbit CEO)

Gotbit employees (Russia)

Four individuals from cryptocurrency “market makers”