The U.S. Securities and Exchange Commission (SEC), the FBI, and the Department of Justice cooperated to file fraud charges against three companies claiming to be market makers and nine individuals. First, they were involved in selling crypto assets as securities to retail investors, while laundering transactions to mislead investors. purchase these assets.
High trading volume is a lie! SEC exposes crypto market manipulation
The SEC investigation revealed that several crypto asset promoters including Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, Nam Tran, and Vy Pham collaborated with companies claiming to be market makers. These market makers include ZM Quant, Gotbit and CLS Global, which were hired to manipulate the price and trading volume of a variety of crypto-assets that were illegally sold as securities in unregistered exchanges.
(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)
Gotbit manipulates the market: Washing Saitama, Robo Inu
Gotbit and its marketing director Fedor Kedrov are facing market manipulation charges for allegedly using a deceptive technique called "wash trading."
"Wash trading" is a practice of artificially increasing trading volume by buying and selling the same asset, creating the illusion of strong market demand. Gotbit was accused of conducting wash trades for promoters promoting two cryptocurrency projects, Saitama and Robo Inu.
Vietnamese junk coin expert hires market maker to cut leeks
These cryptocurrency projects were founded by Vy Pham, a Vietnamese citizen living in California. Pham already faces a series of separate charges, including unregistered securities offerings, securities fraud and market manipulation. This shows the sophistication of cooperative scams in the crypto market, who use various means to make investors mistakenly believe that these tokens are very popular.
FBI issued coins to lure market makers and obtained evidence of market manipulation
As part of the investigation, the FBI directed the creation of a cryptocurrency company, NexFundAI, which had a token on Ethereum that prosecutors said ZM Quant, CLS Global and another company, MyTrade, all agreed to help manipulate.
The FBI said that after the token began to be traded, they also carefully monitored it to minimize the risk that retail investors might purchase it before trading was banned.
SEC Warning: Beware of Crypto Group Scams
“Retail investors are being defrauded by institutions in the crypto asset market,” said Sanjay Wadhwa, director of the SEC’s Enforcement Division. He warned investors to remain vigilant as promoters and self-proclaimed market makers collaborate to defraud the public.
The SEC also alleged that ZM Quant and its employees Baijun Ou and Ruiqi Lau, Gotbit employee Fedor Kedrov, and CLS Global’s Andrey Zhorzhes were involved in manipulating the crypto market.
Trillions of dollars of transactions are so fake
The SEC noted that in some cases, algorithms or robots were used to generate massive amounts of false trading activity, with the number of false trades reaching billions per day and artificially created trading volume reaching trillions of dollars per trading day. It creates the illusion of a highly active market, tricking investors into believing that these assets are in high demand.
SEC seeks permanent injunction
The SEC filed five separate lawsuits in the United States alleging that the defendants violated anti-fraud and market manipulation provisions of federal securities laws. The SEC is seeking multiple penalties, including:
Permanent injunction: Prevents defendants from continuing to violate federal securities laws
Conduct prohibitions: Prohibition of specific market conduct
Illegal Proceeds Recovery: Recovery of purported illegal gains plus interest
Civil Penalties: Financial penalties imposed on a defendant
Additionally, the SEC is seeking executive injunctions against certain defendants, barring them from holding future leadership positions in public companies.
Notably, three defendants, Russell Armand, Maxwell Hernandez and Vy Pham, have agreed to a settlement that will permanently enjoin them from violating federal securities laws and bar them from future executive positions.
Key trading market makers are under regulatory scrutiny
In addition to the above-mentioned small and medium-sized market makers, the well-known market maker Cumberland DRW has also recently been sued by the SEC, accusing it of being unqualified and trading unregistered securities. It shows that these traders who really dominate the price of the crypto trading market are washing arbitrage, serving different cryptocurrency projects, and assisting in the sale of assets. I am afraid it is no longer as easy as usual.
(SEC takes action against market makers! Accused Cumberland DRW of engaging in unregistered securities dealers and promoting specific currencies)
This article FBI issued currency to arrest market makers! The single-day fake transaction amounted to trillions of magnesium, and the service of selling leek cutting services first appeared on Chain News ABMedia.
