The US Securities and Exchange Commission (SEC) has filed fraud and market manipulation charges against four market-making firms and 18 associated individuals.
These charges were brought forward in civil suits in the District Court of Massachusetts on October 9, targeting Gotbit Consulting, ZM Quant Investment, CLS Global, and MyTrade.
The Federal Bureau of Investigations (FBI) and the Department of Justice (DOJ) also participated in this investigation.
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Gotbit Consulting, along with its marketing director, Fedor Kedrov, is accused of using wash trading to create the illusion of interest in cryptos like Saitama and Robo Inu. These two projects were created by Vy Pham, who now faces separate charges for fraud and unregistered securities offerings. Four individuals connected to her are also charged, with Pham and two associates agreeing to partial settlements.
ZM Quant Investment, CLS Global, and MyTrade face similar charges related to a coin called NexFundAI, which was actually created by the FBI as part of their investigation.
The FBI revealed that other cryptocurrencies under investigation for involvement in fraudulent tactics include SaitaRealty, SaitaChain, VZZN, and Lillian Finance.
The SEC is seeking fines, repayment of profits from fraud, and legal penalties for all defendants. Some could also be banned from serving as company leaders.
Acting United States Attorney Joshua Levy commented on the situation:
Wash trading has long been outlawed in the financial markets, and cryptocurrency is no exception. These are cases where an innovative technology – cryptocurrency – met a century old scheme – the pump and dump. The message today is, if you make false statements to trick investors, that's fraud. Period.
Overall, this coordinated effort by the SEC, FBI, and DOJ illustrates the serious consequences for those engaging in fraudulent schemes within the cryptocurrency market.
In other news, a recent FBI investigation found that crypto founder Adam Iza had bribed LA cops to help him extort victims for crypto.
