US charges 4 companies, 14 individuals with crypto fraud
Four cryptocurrency companies and 14 individuals have been charged in what U.S. prosecutors describe as the first criminal prosecution targeting market manipulation and sham trading in the crypto industry.
The companies involved — Gotbit, ZM Quant, CLS Global, and MyTrade — are accused of engaging in fraudulent practices designed to manipulate crypto markets, according to Reuters.
The U.S. Department of Justice in Boston announced the charges following an extensive investigation that led to arrests overseas. Five people have either pleaded guilty or agreed to do so, per Reuters.
Some of the individuals listed in the indictment resided in Hong Kong and the United Kingdom, while others lived in the United States.
Illicit crypto activities
The accused behaviors included conspiracy to defraud investors through illegitimate advertising, market manipulation, manipulative trades, the use of multiple wallets, online marketing, messaging applications, and artificially inflating crypto prices, according to the indictment document.
Gotbit, one of the key firms implicated, has faced multiple allegations of unethical behavior in the past. The company, previously linked to several “rug pull” scams where developers vanished with investor funds, is no stranger to controversy.
Gotbit had previously acknowledged engaging in questionable business practices, further cementing its notorious reputation in the crypto space.
Based in the United States, ZM Quant offered what appeared to be market-making services. However, according to court documents, these services allegedly involved manipulative tactics such as wash trading, creating fake volume to inflate token prices, and misleading investors.
These charges highlight concerns over market integrity in the crypto space, as federal prosecutors indicated that crypto firms are subject to scrutiny similar to traditional financial institutions. This case marks one of the first criminal actions against firms like ZM Quant for such behavior.
