US charges 18 people, companies for crypto fraud

• US has charged 14 people and four companies for fraud and market manipulation among other illegal activities.
• The prosecution says this is the first criminal case involving cyptocurrency companies over market manipulation and wash trading.

US prosecutors have filed charges against 14 people and four crypto companies over widespread market manipulation and fraud.

According to a press release from the US Attorney’s Office, District of Massachusetts, federal prosecutors said on Wednesday that the case involves the first criminal charges against financial services companies related to the crypto market. As well as fraud, accusations include sham trades and inflating of crypto prices.

“What the FBI uncovered in this case is essentially a new twist to old-school financial crime. ‘Operation Token Mirrors’ targeted nefarious token developers, promoters, and market makers in the crypto space,” said Jodi Cohen, special agent in charge of the Federal Bureau of Investigation, Boston Division.

Sophisticated trading schemes saw investors lose millions of dollars, Cohen added.

The four companies are Gotbit, CLS Global, ZM Quant and MyTrade.

US prosecutors in Boston also revealed charges against the firms’ leaders and their employees. Those indicted include individuals in the United States and Hong Kong. There have been arrests made overseas and federal prosecutors said five individuals agreed to plead guilty to the charges.

Saitama and Gotbit

Maxwell Hernandez, Russell Armand and Nam Tran are said to have created and promoted various crypto projects alleged to have engaged in manipulation of prices and targeted defrauding users.

It includes the platform Saitama, a crypto project on Ethereum whose native token reached a market capitalization of over $7.5 billion at its peak. Saitama also offered a real estate investment product and token.

One of the crypto firms charged Gotbit, allegedly engaged in wash trading and inflated trading volume for a token called Robo Inu tenfold. This resulted in $1 million in fake volume.

Imagine getting charged for doing $1m in fake volume for some thing called Robo Inu 😭 pic.twitter.com/Dc0DJbJOuO

— db (@tier10k) October 9, 2024

The charges against the 14 and the companies come as the industry continues to face regulatory scrutiny amid claims of market manipulation and theft.

In September, the FBI arrested Malone Lam, 20, and Jeandiel Serrano, 21, for fraud and money laundering conspiracy in a $230 million crypto theft case.