- The United States indicted 14 people and four companies on charges of fraud and market manipulation.
- Prosecutors said this was the first criminal case involving a cryptocurrency company involved in market manipulation and wash trading.
U.S. prosecutors have indicted 14 people and four cryptocurrency companies on charges of widespread market manipulation and fraud.
Federal prosecutors said Wednesday that the case involves the first criminal prosecution of a financial services company involved in the cryptocurrency market, according to a press release from the U.S. Attorney’s Office for the District of Massachusetts. In addition to fraud, there are also allegations of fraudulent transactions and inflated cryptocurrency prices.
“What the FBI uncovered in this case is essentially a new twist on a traditional financial crime. ‘Operation Token Mirror’ targeted nefarious token developers, promoters and market makers in the cryptocurrency space,” said Jody Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division.
The elaborate trading scheme resulted in investors losing millions of dollars, Cohen added.
The four companies are Gotbit, CLS Global, ZM Quant and MyTrade.
U.S. prosecutors in Boston also unveiled charges against the company’s leaders and employees. Those charged include individuals residing in the United States and Hong Kong. There have been arrests overseas, and federal prosecutors say five people have agreed to plead guilty to charges.
Saitama and Godbit
Maxwell Hernandez, Russell Armand, and Nam Tran are alleged to have created and promoted various cryptocurrency projects that are known to target price manipulation and scam users.
This includes Platform Saitama, a cryptocurrency project on Ethereum whose native token achieved a market capitalization of over $7.5 billion at its peak. Saitama also provided real estate investment products and tokens.
One of the cryptocurrency companies accused Gotbit of wash trading a token called Robo Inu and inflating the trading volume by 10 times. This resulted in $1 million in fake trading volume.
Imagine getting charged for making a fake $1 million transaction for something called Robo Inu 😭 pic.twitter.com/Dc0DJbJOuO
— DB (@tier10k) October 9, 2024
The indictments against the 14 companies and others come as the industry continues to face regulatory scrutiny over allegations of market manipulation and theft.
Last September, the FBI arrested Marlon Lam, 20, and Jindiel Serrano, 21, on charges of fraud and money laundering conspiracy in the $230 million cryptocurrency theft.