BOSTON, Oct 9 (Reuters) – In a sweeping crackdown on cryptocurrency fraud, federal prosecutors in Boston have charged three companies—Gotbit, ZM Quant, and CLS Global—along with 15 individuals for their involvement in extensive market manipulation and fraud schemes. The investigation, notably marked by the FBI’s first-time creation of a new digital token, has resulted in four arrests, five guilty pleas, and the seizure of over $25 million in cryptocurrency.
Details of the Charges
Acting U.S. Attorney Joshua Levy stated that the defendants orchestrated sham trades to artificially inflate the trading volume of various cryptocurrency tokens, ultimately leaving unsuspecting investors at a loss. “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 explained.
Role of NexFundAI
As part of the investigation, the FBI directed the establishment of a cryptocurrency company, NexFundAI, which launched a token on the Ethereum blockchain. Prosecutors allege that ZM Quant, CLS Global, and another firm, MyTrade, conspired to manipulate this token’s trading. Authorities monitored the token’s trading to protect retail investors, disabling trading before any potential purchases were made.
Key Figures Arrested
Among those charged is Manpreet Kohli, CEO of Saitama, who was arrested in the United Kingdom. Saitama, at one point valued at $7.5 billion, reportedly manipulated trading of its tokens while secretly selling them off. Five other current or former Saitama employees are also charged, with three already pleading guilty.
Aleksei Andriunin, CEO of Gotbit, was arrested in Portugal on Tuesday. His company, identified as a cryptocurrency market maker, allegedly engaged in wash trading and market manipulation for various clients from 2018 to 2024. Two employees from Gotbit in Russia also face charges.
Additional Individuals Charged
Other individuals charged include:
- Liu Zhou, founder of MyTrade, who has agreed to plead guilty.
- Riqui Liu and Baijun Ou, employees of ZM Quant.
- Andrey Zhorzhes, an employee of CLS Global.
- Michael Thompson, associated with a company called VZZN.
- Bradley Beatty, who fraudulently promoted his cryptocurrency venture, Lillian Finance.
Conclusion
This extensive investigation underscores the growing scrutiny of cryptocurrency markets, as authorities ramp up efforts to combat fraud and protect investors. With the involvement of both criminal and civil cases from the U.S. Securities and Exchange Commission, this action represents a significant step in addressing fraudulent practices within the burgeoning digital currency landscape.
