Federal prosecutors charged four purported market makers, a handful of crypto projects, and over a dozen individuals with manipulating various crypto markets Wednesday, saying they profited from fees and selling manipulated coins at elevated values.
According to charging documents unsealed Wednesday, Gotbit, CLS Global, MyTrade and ZM Quant wash traded various tokens to make it appear they had more legitimate activity than they actually did, selling some of these tokens at “artificially inflated prices” to others, marketing these coins on various platforms and convincing exchanges to let them buy tokens with reduced fees.
The U.S. Securities and Exchange Commission also brought charges against ZM Quant and employees Baijun Ou and Ruiqi Lau; Gotbit and employee Feder Kedrov; and CLS Global with employee Andrey Zhorzhes, alongside a number of individuals described as “crypto asset promoters”: Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, Nam Tran and Vy Pham. A representative for the Department of Justice (DOJ) said that the cases were referred to prosecution by the SEC over two years ago.
Prosecutors say that the market maker defendants publicly claimed to be legitimate market makers offering legal services, but privately offered clients illegal services including wash trading.
At least in Gotbit’s case, the illegal offerings weren’t really all that private: in 2019, Gotbit co-founder Alexey Andryunin, then a 20-year-old college sophomore, explained to CoinDesk exactly how the wash trading services he offered his clients worked. He was blunt about the questionable nature of his business, admitting that Gotbit was not registered in any jurisdiction because it was “not entirely ethical.” Separate criminal charges have been filed against Andryunin.
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