Federal Charges Filed Against 14 Individuals and 4 Crypto Companies for Market Manipulation and Wash Trading

The U.S. Department of Justice (DOJ) made history on Wednesday by hitting 14 individuals and four crypto companies with criminal charges for market manipulation and “wash trading” in the digital asset industry. This marks the first case of its kind, with over $25 million in crypto seized as part of the investigation.

The DOJ announced charges against companies such as Gotbit, ZM Quant, CLS Global, and MyTrade, alleging that they engaged in wash trades with digital tokens to inflate their prices and attract new investors. The defendants then allegedly sold their tokens in a “pump and dump” scheme.

Acting United States Attorney Joshua Levy stated, “These are cases where an innovative technology—cryptocurrency—met a century-old scheme—the pump and dump.” He emphasized that wash trading has long been outlawed in financial markets and cryptocurrency is no exception.

The FBI created a token called NexFundAI as part of its investigation, dubbed “Operation Token Mirrors,” alleging that ZM Quant, CLS Global, and MyTrade engaged in wash trading or conspired to manipulate trading numbers. Gotbit, its CEO, and two directors were also charged for similar schemes.

One of the defendants, Gotbit CEO Aleksei Andriunin, 26, was arrested in Portugal and awaits extradition. He previously boasted about faking trade volumes at crypto exchanges in 2019. The DOJ also alleged that Saitama, another company, manipulated the market for its token and secretly sold tokens for profits.

In separate civil charges, the Securities and Exchange Commission accused Gotbit of providing “on-demand market manipulation” by generating fake trading volume. The regulator seeks permanent injunctions and disgorgement of ill-gotten gains from the alleged unlawful conduct.

This groundbreaking case sheds light on the dark side of the digital asset industry and underscores the importance of regulatory oversight to protect investors from fraudulent schemes.