US Charges 3 Companies and 15 Individuals in Major Cryptocurrency Fraud Case
Oct 10, 2024
2 min read
Three cryptocurrency companies and 15 individuals have been charged with extensive fraud and market manipulation, marking a significant crackdown by federal authorities. This unprecedented action follows an FBI-led investigation that involved the creation of a new digital token to expose criminal activities in the cryptocurrency space.
Key Takeaways
Charges Filed: Three companies—Gotbit, ZM Quant, and CLS Global—along with 15 individuals, face serious allegations of fraud.
Arrests Made: Four arrests have occurred, with several individuals agreeing to plead guilty.
Seizures: Authorities have confiscated over $25 million in cryptocurrency as part of the investigation.
Overview of the Charges
Federal prosecutors in Boston have detailed a scheme where the defendants engaged in sham trades to artificially inflate the trading volume of various cryptocurrency tokens. Acting U.S. Attorney Joshua Levy described the case as a blend of modern technology and traditional fraud, likening it to a classic "pump and dump" scheme.
The investigation revealed that the companies involved manipulated trading activities, leaving unsuspecting investors at a loss. The fraudulent activities reportedly took place from 2018 to 2024, with one company, Saitama, once boasting a market value of $7.5 billion before its leadership began to manipulate token trading.
The Role of the FBI
In a novel approach, the FBI directed the creation of a cryptocurrency company named NexFundAI, which had a token on the Ethereum blockchain. This token was used as a tool to monitor and expose the fraudulent activities of the companies involved. Prosecutors stated that while the token was traded, they took precautions to minimize the risk of retail investors purchasing it before trading was disabled.
Key Individuals Charged
The following individuals have been charged in connection with the fraud:
Manpreet Kohli: CEO of Saitama, arrested in the UK.
Aleksei Andriunin: CEO of Gotbit, arrested in Portugal.
Liu Zhou: Founder of MyTrade, has agreed to plead guilty.
Riqui Liu: Employee at ZM Quant, charged.
Baijun Ou: Employee at ZM Quant, charged.
Andrey Zhorzhes: Employee at CLS Global, charged.
Michael Thompson: Worked at VZZN, charged.
Bradley Beatty: Promoted his crypto company fraudulently.
Implications for the Cryptocurrency Market
This case highlights the ongoing challenges within the cryptocurrency market, where fraud and manipulation can undermine investor confidence. The actions taken by federal authorities signal a commitment to enforcing regulations and protecting investors from deceptive practices.
As the investigation continues, the outcomes for the charged individuals and companies will likely set precedents for future cases in the rapidly evolving world of digital currencies. The involvement of the FBI in creating a token specifically for this investigation underscores the seriousness of the allegations and the lengths to which authorities will go to combat fraud in the cryptocurrency space.
Conclusion
The charges against these companies and individuals represent a significant step in addressing fraud within the cryptocurrency industry. As regulators and law enforcement agencies ramp up their efforts, the landscape of digital currencies may see increased scrutiny and regulation, aiming to safeguard investors and ensure a fair trading environment.
Sources
US charges 3 companies, 15 people with cryptocurrency fraud | Reuters, Reuters.