The U.S. DOJ has charged 18 individuals and entities in an international operation targeting market manipulation and fraud in the crypto industry. The defendants, including market makers and token promoters, are accused of using wash trading and false trading activity to deceive retail investors and artificially inflate crypto prices. This is the first major criminal case of its kind in the crypto market. The SEC also filed charges against the scheme operators.
Key Points:
- 18 individuals and entities charged for widespread fraud and market manipulation in the cryptocurrency markets.
- First-ever criminal charges for market manipulation and wash trading in the crypto industry.
- Over $25 million in crypto seized, and multiple trading bots used for wash trading deactivated.
- Four cryptocurrency companies and four financial services firms (“market makers”) involved in fraudulent schemes.
Short Narrative:
The U.S. Department of Justice (DOJ) has unsealed charges against 18 individuals and entities involved in a large-scale fraud and market manipulation scheme in the cryptocurrency markets. These include leaders from four cryptocurrency companies and financial services firms who provided market manipulation services, such as wash trading, to inflate the trading volume of various crypto assets. The largest of these companies, Saitama, once had a multi-billion-dollar market value, which was artificially inflated through pump-and-dump schemes.
The fraudulent activities, which spanned from 2018 to 2024, involved creating false trading activity to deceive retail investors into buying tokens that were manipulated to appear as lucrative investments. Market makers ZM Quant, CLS Global, Gotbit, and MyTrade allegedly played key roles in executing these wash trades. In some cases, these market makers used bots to generate millions of fake transactions to inflate prices. So far, four defendants have pleaded guilty, with more arrests made in Texas, the UK, and Portugal.
Actionable Insight:
This case highlights the growing scrutiny on crypto market manipulation and serves as a warning to both crypto firms and investors. Firms involved in wash trading or price manipulation face severe legal consequences, while investors are urged to perform thorough due diligence before investing in crypto assets.
Call for Information:
FinTelegram invites insights into other crypto companies or financial services firms that may be involved in similar market manipulation schemes. How widespread is this fraudulent activity within the industry?
