FBI Charges Three Crypto Firms and Multiple Individuals in Fraud Scheme

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Key Takeaways

  • The FBI charged Gotbit, ZM Quant, CLS Global, and 15 individuals with crypto fraud and market manipulation.
  • Over $25 million in cryptocurrency has been seized, with four arrests and five plea agreements.
  • The FBI uncovered the scheme by using an innovative digital token, NexFundAI.

The FBI took major action on Wednesday, charging three cryptocurrency companies and 15 individuals with large-scale fraud and market manipulation. 

This historic move follows an investigation where, for the first time, the FBI created a digital token, NexFundAI, to aid in identifying criminal activities in the crypto space.

Details of the Investigation and Arrest of Top Executives from Saitama and Gotbit

Authorities in Boston charged Gotbit, ZM Quant, CLS Global, and key figures from these and other companies.

Four individuals were arrested, and five have reached plea agreements. Additionally, authorities seized over $25 million in cryptocurrency assets.

The companies are accused of engaging in wash trading, artificially inflating token prices through coordinated trades to mislead investors.

Among those charged are Manpreet Kohli, CEO of Saitama, a company that once had a market value of over $7 billion.

Kohli was arrested in the UK on Monday, along with five other employees. Aleksei Andriunin, CEO of Gotbit, was arrested in Portugal on Tuesday, while two other Gotbit employees in Russia were also charged.

Gotbit, described as a crypto “market maker,” allegedly manipulated trading volumes from 2018 to 2024, inflating tokens on behalf of multiple clients.

This practice, a century-old fraud tactic, was used to lure unsuspecting investors.

Acting U.S. Attorney Joshua Levy emphasized that wash trading is illegal in financial markets, including cryptocurrency. He noted the historical significance of this investigation, which identified numerous fraudsters within the crypto industry.

As part of “Operation Token Mirrors,” the FBI created NexFundAI, an Ethereum-based token to track wash trading and manipulation.

The digital token was allegedly manipulated by ZM Quant, CLS Global, and MyTrade, who are now charged with conspiracy. Gotbit was also implicated in similar actions involving NexFundAI.

Despite the scheme, NexFundAI continues to trade on the market with a current value of $0.00000002442 and a market cap of $102,000, though its trading volume has plummeted since the operation was revealed.

Other individuals charged include Liu Zhou, founder of MyTrade, and market manipulators from ZM Quant, CLS Global, and VZZN, among others.

These defendants are accused of promoting market manipulation services to exploit investors, further fueling the fraudulent schemes.