On the 10th of this month, U.S. prosecutors indicted four cryptocurrency-related companies and 14 related individuals. The list includes Gotbit, ZM Quant, CLS Global and MyTrade, among which Gotbit is an active market maker in meme coins, and meme coins such as DUKO, PENG, PONKE, SOLAMA, MYRO, and BONK are all its operating targets. What is more special is that Gotbit stated at the beginning of this month that it had established a very early cooperation relationship with the Ethereum Neiro meme currency, which was successfully listed on Binance spot trading pairs during the "Neiro Rebellion".

(SEC takes action against market makers! Accused Cumberland DRW of engaging in unregistered securities dealers and promoting specific currencies)

FBI fishing spree returns, four market makers arrested

The report quoted prosecutor Joshua Levy as saying that the companies were accused of creating fake transactions, artificially inflating the trading volume of various cryptocurrency tokens, and then selling them. "This is a case of new-age technology cryptocurrency meeting old-school fraud, a pump-and-dump scheme that's as old as the stock market," Joshua Levy told reporters.

It is worth mentioning the FBI’s investigation methods this time. The FBI directed the creation of a cryptocurrency company, NexFundAI, which issued a token on the Ethereum blockchain. Prosecutors said ZM Quant, CLS Global and another company MyTrade agreed Help manipulate the coin.

Aleksei Andriunin, the CEO of cryptocurrency market maker Gotbit who lives in Russia and Portugal, was arrested in Portugal on Tuesday. Two of his company's employees in Russia were also accused of the same.

ICO started as a market maker, creating false transaction volume through procedures

Gotbit was founded during the 2018 ICO boom when Alexey Andryunin was just a 20-year-old Russian university student. As early as 2019, Coindesk revealed Gotbit's fake trading volume business. At that time, the fee for listing on a small exchange was US$8,000, and it would charge US$6,000 per month to create fake trading volume through an algorithm that simulates normal market activity. cost. To get a coin listed on CoinMarketCap, it would cost $15,000.

This scenario was reasonable considering the market conditions at the time, and even Bitwise believed that 95% of the Bitcoin trading volume at the time was fake. Alexyey Andryunim said that exchanges usually know which altcoin trading volumes were manipulated by Gotbit’s bots, but higher trading volumes are in the interests of these exchanges themselves. Alexey Andryunin also said that at the time, these exchanges would charge a few Bitcoins (about $20,000 at the current price) as a condition for listing the currency.

A number of well-known meme coins cooperated with it, and on-chain detectives warned of Gotbit operations a year ago

When Gotbit announced a partnership with NextGemAI on July 19, they didn’t know at the time that this was the bait dropped by the FBI. Earlier, on April 9, they also officially announced their cooperation with TON chain GameFi Hamster. On the 3rd of this month, Gotbit also stated that Neiro, whose name is Ethereum, has had a cooperative relationship with the company since the early days. However, after the incident, Neiro officially stated that it had ended its cooperative relationship with Gotbit.

As early as a year ago, KOL ZachXBT warned Gotbit’s market-making behavior. He said that Gotbit’s model is to “push the price up to 10 times in the first few minutes of the price discovery stage to create many people’s desire to buy, and subsequently "Selling tokens at high points." Therefore, he himself also questioned why the official chose a notorious market maker to cooperate under Neiro's post on ending cooperation.

CryptoQuant founder: Regulatory intervention can help remove the speculative impression of cryptocurrencies

Neiro’s chief technology officer said that Neiro is a meme currency with community-led participation and does not have any capital. When Justin Sun said that he wanted Neiro to be listed on Huobi, Neiro officials only had a few hours to find a market maker that could cooperate, and Gotbit was one of the few market makers that had established contact with the official. At the same time, Gotbit's fees are also the best among market makers. The official signed a three-month contract with Gotbit and regarded it as a short-term solution for listing on Huobi. Neiro knew that Gotbit had a bad reputation, but because there weren’t many good ones in the industry, they didn’t take it too seriously.

Gotbit’s notoriety can be seen from the recent participation in several meme coins, such as BEER and ANALOS. These tokens are all listed on second-tier exchanges, but there are also obvious price manipulations.

Ki Young Ju, the founder of CryptoQuant, expressed a positive attitude towards this, saying: "Cryptocurrencies will soon be regulated. It is only a matter of time. Regulations will help eliminate the stereotype of gambling."

It is worth noting that Hamster and the exchange Bitget, including the latest one to be listed on international exchanges such as Binance, have public partnerships with Gotbit, but as of the time of writing, neither has commented on this. Bitget was even Gotbit’s latest partner before he was caught, which became the unexploded bomb in the whole thing.

This article Neiro market maker was arrested by the United States for cutting leeks, and it was revealed that there are still several CEX and TON game token cooperation. First appeared on Chain News ABMedia.