Federal prosecutors in Boston have charged four cryptocurrency firms—Gotbit, ZM Quant, CLS Global, and MyTrade—along with 14 individuals in what is being described as the first criminal prosecution of financial services firms for market manipulation and sham trading in the crypto sector.
The defendants are accused of engaging in schemes akin to stock market 'pump and dump' tactics, which involved sham trades to artificially inflate the trading volume of various cryptocurrency tokens before selling them off. Notably, the company Saitama had a market value of $7.5 billion at one point due to these manipulative practices.
Manpreet Kohli, the CEO of Saitama, was arrested in the United Kingdom, while five other employees have also been charged, with three already pleading guilty. Aleksei Andiunin, the CEO of Gotbit, is among those charged, facing allegations of wash trading that misled investors and earned the company tens of millions of dollars.
Prosecutors highlighted that from 2018 to 2024, Gotbit engaged in significant market manipulation on behalf of several crypto clients. Charges have also been filed against individuals residing overseas, including Liue Zhou, the founder of MyTrade, who has agreed to plead guilty, and others from ZM Quant and CLS Global.
This crackdown on fraudulent practices in the cryptocurrency market marks a significant step towards greater accountability and transparency in the financial services sector.