- Crypto fraud case sees 18 charged for market manipulation, with charges unsealed in Boston.
- Over $25 million in digital currency seized; trading bots used for wash trading of 60 assets have been deactivated.
- Major players like Saitama and market makers like ZM Quant and Gotbit were part of the fraud scheme targeting investo
The federal authorities said that 18 people and companies have been indicted in a large-scale cryptocurrency market manipulation and fraud case. The charges, which were unsealed in Boston, name leaders from four cryptocurrency companies and four financial services companies and their employees as defendants. These companies have been alleged to manipulate the prices of digital currencies with a view to swindling investors.
According to a recent report, four of the defendants have entered their guilty pleas, while three others were arrested this week in Texas, the United Kingdom, and Portugal. The authorities have confiscated more than $25 million in digital currency and stopped several trading bots that were engaged in wash trading of 60 digital assets.
Crypto Fraud Scheme
The court filings indicate that defendants generated fake order flows to manipulate the price of their digital currencies, a classic “pump and dump”. These individuals generated wash trades to increase the value of their tokens and, therefore, attract investors and inflate the trading prices. The biggest of the companies that are involved in the scandal, Saitama, was valued at billions of dollars before the scheme was exposed.
More investigations revealed that financial services companies, marketing makers, were used to perform the wash trades for certain payments. Some of these firms are accused of having engaged in the manipulation of trading volumes across several exchanges; one of the Defendants himself uttered how the aim was to ensure that the buyers who are not informed lose their money to the firm.
Crypto Firms Engaged in Fraud
The companies that were involved in this widespread manipulation include ZM Quant, CLS Global, MyTrade and Gotbit. These firms are alleged to have employed fraudulent trading schemes for cryptocurrency firms including Saitama and NexFundAI, the last of which was formed by the police as a part of the investigation.
Levy, the acting U.S. attorney, also stressed that the cryptocurrency sector should remain cautious as these types of frauds have been prohibited for a long time. FBI unit based in Boston, Jodi Cohen said that the agency’s Operation Token Mirrors revealed these fraudulent schemes and led to several arrests and charges filed. This is one of the biggest crackdowns on cryptocurrency related fraud in the last few years.
