Major Cryptocurrency Fraud Bust: 18 Charged in US

In a significant crackdown on cryptocurrency fraud, U.S. federal prosecutors have charged 18 individuals and companies, including three cryptocurrency firms, for engaging in extensive market manipulation and fraudulent activities. This unprecedented action follows an investigation where the FBI created a new digital token to expose criminal activities in the crypto space.

Key Takeaways

• Charges Filed: 18 individuals and three companies charged with fraud and market manipulation.
• Arrests Made: Four arrests executed, with five individuals agreeing to plead guilty.
• Seizures: Over $25 million in cryptocurrency seized.
• Nature of Fraud: Involvement in 'pump and dump' schemes and sham trading practices.

Overview of the Charges

Federal prosecutors in Boston have taken action against the firms Gotbit, ZM Quant, and CLS Global, along with their leaders and employees. The investigation revealed that these entities engaged in sham trades to artificially inflate the trading volume of various cryptocurrency tokens, ultimately leaving innocent investors at a loss.

Acting U.S. Attorney Joshua Levy described the case as a convergence of modern technology and traditional fraud, likening it to age-old 'pump and dump' schemes that have plagued financial markets for decades.

Details of the Investigation

The investigation was notably unique as it involved the FBI directing the creation of a cryptocurrency company named NexFundAI. This company had a token on the Ethereum blockchain, which prosecutors allege was manipulated by ZM Quant, CLS Global, and another firm, MyTrade.

Prosecutors highlighted that Saitama, the largest company implicated, once boasted a market value of $7.5 billion. However, its leadership engaged in manipulative trading practices and secretly sold off tokens, leading to significant financial losses for investors.

Key Individuals Charged

Among those charged are:

1. Manpreet Kohli - CEO of Saitama, arrested in the UK.
2. Aleksei Andiunin - CEO of Gotbit, arrested in Portugal.
3. Liu Zhou - Founder of MyTrade, has agreed to plead guilty.
4. Riqui Liu - Employee at ZM Quant.
5. Baijun Ou - Employee at ZM Quant.
6. Andrey Zhorzhes - Employee at CLS Global.
7. Michael Thompson - Worked at VZZN, a company founded by a former Saitama employee.
8. Bradley Beatty - Promoted his crypto company, Lillian Finance, fraudulently.

Implications for the Cryptocurrency Market

This crackdown serves as a stark reminder of the vulnerabilities within the cryptocurrency market. The actions taken by federal authorities may lead to increased scrutiny and regulation in the crypto space, aiming to protect investors from fraudulent schemes.

The U.S. Securities and Exchange Commission (SEC) has also filed related civil cases, indicating a broader effort to address misconduct in the cryptocurrency sector.

Conclusion

The recent charges against these individuals and companies mark a pivotal moment in the fight against cryptocurrency fraud. As authorities continue to investigate and prosecute such cases, the landscape of digital currencies may undergo significant changes, potentially leading to a more secure environment for investors.

Sources

• US charges 18 people, companies with cryptocurrency fraud, Yahoo Finance Canada.
• US charges 18 people, companies with cryptocurrency fraud, Yahoo Finance Canada.