Hold onto your hats, folks! In a dramatic twist that sounds straight out of a thriller, over $25 million in cryptocurrencies have been seized, and trading bots allegedly at the heart of a massive wash trading scheme have been sent packing.
The big guns in the U.S. — the SEC, FBI, and DOJ — have charged Gotbit and a few other crypto companies with market manipulation on a grand scale. If you're wondering who else got tangled in this web, several individuals associated with these companies are also facing the music.
Here's the scoop according to the SEC: Gotbit, ZM Quant, CLS Global, and MyTrade MM were caught using bots to pump up trading volumes on centralized exchanges with wash trading. That's like padding your resume with fake achievements, except with trades!
Even meme coins couldn't escape the drama. The Massachusetts U.S. Attorney’s office pointed fingers at popular meme coin projects like Saitama and Robo Inu, citing complaints against them.
The SEC alleges that these companies were pulling off “pump and dump” schemes. They'd hype up token values, lure in fresh investors, and then cash out, leaving the newbies in the lurch.
In a sweep worthy of a blockbuster movie, law enforcement swooped in and seized $25 million in crypto, taking down bots that had been churning out fake transactions across a whopping 60 crypto assets.
Among those named in the investigation are Russell Armand, Maxwell Hernandez, and Manpreet Kohli. They're accused, along with others, of using Gotbit and ZM Quant to cook up fake trading volumes for various cryptocurrencies. Kohli and Tran are also facing charges for conspiracy to commit wire fraud and for running a money-transmitting business without a license.
Interestingly, Armand and Hernandez have already thrown in the towel, pleading guilty to the charges. Pham, from sunny California, admitted to some shady dealings at Saitama and another unnamed crypto firm.
Others in the hot seat include Gotbit’s Aleksei Andriunin, Fedor Kedrov, and Qawi Jalili, along with Riqui Liu and Baijun Ou of ZM Quant.
The plot thickens with an investigation that kicked off in 2017. It uncovered that the suspects were using bots to fake transactions on a mind-boggling scale — quadrillions of them, translating to billions in artificial trading volume daily. This trickery duped unsuspecting investors into buying tokens at inflated prices, only for the rug to be pulled when Gotbit and its cohorts cashed out.
In a twist worthy of a detective novel, the FBI created a cryptocurrency called NexFundAI to sneak into the world of market-making firms. NexFundAI, still trading with a market cap of about $237,000, was designed to look like a legit project merging crypto with AI. The ruse worked, pulling in the market manipulators who thought they had found their next big score. What a caper!
