Federal prosecutors have charged four cryptocurrency market makers, several crypto projects, and over a dozen individuals with manipulating crypto markets, alleging they profited from fees and selling manipulated coins at inflated prices. According to unsealed charging documents, these market makers engaged in wash trading to falsely inflate trading activity, then sold these tokens at elevated prices to unsuspecting buyers. They also marketed these coins on various platforms and convinced exchanges to offer reduced fees. The US Securities and Exchange Commission has also filed charges against several individuals and companies, including ZM Quant, Gotbit, and CLS Global.
Prosecutors claim that these market makers publicly presented themselves as legitimate service providers but privately offered illegal services, including wash trading. In one instance, a co-founder of Gotbit openly discussed the company's questionable business practices in an interview.
Separate criminal charges have been filed against this individual. The list of manipulated tokens includes Robo Inu, which experienced a price surge after the indictment was made public. Other affected tokens include VZZN and Saitama, all of which are classified as securities. As part of their investigation, FBI agents created an Ethereum-based cryptocurrency called NextFundAI to identify and disrupt the alleged fraudsters.
The token is also considered a security. Authorities have secured approximately $25 million in fraudulent proceeds, which will be returned to investors.