The Securities and Exchange Commission (SEC) has unraveled a massive crypto market manipulation scheme, seizing over $25 million in cryptocurrencies and shutting down trading bots responsible for widespread wash trading.
In a coordinated effort with the Federal Bureau of Investigation (FBI) and the Department of Justice (DOJ), authorities have charged Gotbit and four other crypto firms with manipulating market prices through wash trading and pump-and-dump schemes. Several individuals associated with these firms have also been indicted.
According to the SEC, Gotbit, ZM Quant, CLS Global, and MyTrade MM used bots to artificially inflate trading volumes on centralized exchanges by executing fake trades. Popular meme coins Saitama and Robo Inu were among the assets targeted in these schemes.
The accused firms allegedly misrepresented the value of certain tokens, enticing new investors to buy at inflated prices. Once the price was artificially high, the firms would dump their holdings, causing significant losses for retail investors.
The SEC and DOJ seized $25 million in cryptocurrency and deactivated bots responsible for billions of fraudulent transactions across 60 different crypto assets.
Among those indicted are Russell Armand, Maxwell Hernandez, Manpreet Kohli, Nam Tran, and Vy Pham, all associated with Saitama. They are accused of using Gotbit and ZM Quant to manipulate market prices and generate fake trading volume. Kohli and Tran face additional charges of conspiracy to commit wire fraud and operating an unlicensed money-transmitting business.
Armand and Hernandez have already pleaded guilty to these charges, while Pham has admitted to involvement in unlawful conduct at Saitama and another crypto company.
Other individuals indicted include Aleksei Andriunin, Fedor Kedrov, Qawi Jalili, Riqui Liu, and Baijun Ou, from Gotbit and ZM Quant.
The investigation, which began in 2017, uncovered that the suspects used bots to create quadrillions of fake transactions, amounting to billions in artificial trading volume daily. These activities deceived retail investors into buying tokens at inflated prices.
A key turning point in the investigation was the FBI’s creation of a fake cryptocurrency called NexFundAI. Designed to appear as a legitimate project linking crypto and AI, NexFundAI attracted the market manipulators who believed they could exploit it.