ChainCatcher reported that the U.S. Securities and Exchange Commission (SEC), the Federal Bureau of Investigation (FBI), and the Department of Justice (DOJ) jointly filed a lawsuit against four crypto companies suspected of fraud and market manipulation on October 9, including Gotbit Consulting, ZM Quant Investment, and CLS Global. These manipulated tokens were then sold to unsuspecting buyers at artificially inflated prices. These companies also promoted these tokens and persuaded exchanges to lower fees to further increase profits.

Gotbit is the largest company on this list. The market maker has worked with well-known brands such as Bonk, Neiro, Hamster Kombat, Robo Inu, and at its peak, the company managed $1.5 billion in assets and invested nearly $200 million through Gotbit Ventures. Gotbit now faces a fine of up to $5 million or twice the total illegal gains or losses and forfeiture of assets. The CEO, who is also charged, faces up to 20 years in prison.

In 2019, Gotbit’s 20-year-old CEO Alexey Andryunin told CoinDesk about his approach: Gotbit was not registered in any jurisdiction because it was “not entirely ethical.” In 2023, ZachXTB cracked Andryunin’s actions with the help of some leaked documents and a promotional material that stated: “In the first few minutes of the price discovery phase, we will push the price up 10 times to create FOMO and accumulate as much buying power as possible, and sell the most tokens in the subsequent surge.”