US Charges 3 Cryptocurrency Firms and 15 Individuals, Including 2 Tied to Hong Kong, in Fraud Case

Federal prosecutors in Boston have charged three cryptocurrency companies and 15 individuals with engaging in widespread fraud and market manipulation following an investigation led by the Federal Bureau of Investigation (FBI).

This marks the first time the FBI has directed the creation of a new digital token to assist in uncovering criminal activity.

The firms involved, Gotbit, ZM Quant, and CLS Global, along with their leaders and employees, face charges stemming from their participation in fraudulent schemes to artificially inflate the trading volume of cryptocurrency tokens through sham trades. As a result, authorities have arrested four individuals, secured guilty pleas from five others, and seized over US$25 million worth of cryptocurrency.

Acting US Attorney Joshua Levy described the defendants' actions as a deliberate effort to inflate token values and then sell them off, leaving innocent investors in a difficult position.

“This is a case where new-age technology, cryptocurrency, meets an old school fraud, in this case a ‘pump and dump’ scheme, which is as old as the stock markets,” Levy told reporters.

During the investigation, the FBI created a cryptocurrency company, NexFundAI, which issued a token on the Ethereum blockchain. Prosecutors revealed that ZM Quant, CLS Global, and another company, MyTrade, agreed to manipulate the token. Authorities ensured that trading of the token was closely monitored to minimize the risk of retail investors purchasing it before disabling trading. In addition to the criminal charges, the US Securities and Exchange Commission (SEC) has filed related civil cases.

Among the companies involved, Saitama stood out for having a market value of US$7.5 billion at one point. Prosecutors said its leadership manipulated trading of its tokens before secretly selling them. Saitama’s chief executive, Manpreet Kohli, was arrested in the United Kingdom on Monday. Five other current or former employees were charged, with three having already pleaded guilty.

Aleksei Andriunin, the CEO of Gotbit, a cryptocurrency “market maker,” was also charged. Andriunin, who lived in Russia and Portugal, was arrested in Portugal on Tuesday. Prosecutors accused Gotbit of engaging in “wash trading,” a fraudulent practice that inflates trading volume, from 2018 to 2024. Two of Gotbit’s employees in Russia were also charged.

Other individuals facing charges include Liu Zhou, the founder of MyTrade, who has agreed to plead guilty; Riqui Liu of the United Kingdom and Hong Kong; Baijun Ou of Hong Kong, both of whom worked at ZM Quant; and Andrey Zhorzhes from the United Arab Emirates, an employee of CLS Global.

Also charged were Michael Thompson from Virginia, who worked at a cryptocurrency firm called VZZN, and Bradley Beatty from Florida, who allegedly promoted his company, Lillian Finance, fraudulently.

Authorities noted that the defendants advertised market manipulation services to their clients, further amplifying their illegal activities. The individuals charged could not immediately be reached for comment.

By fLEXI tEAM