The U.S. Department of Justice (DoJ) announced arrests and charges against several individuals and entities in connection with allegations of manipulation of digital asset markets as part of a widespread fraud operation.
Law enforcement action – code name Operation Token Mirrors – is the result of the “unprecedented step” taken by the United States Federal Bureau of Investigation (FBI) in creating its own cryptocurrency token and company called NexFundAI.
NexFundAI, according to information posted on the website, was billed as redefining “the intersection between finance and artificial intelligence” and that its goal was to “create a cryptocurrency token that not only serves as a reserve of secure value, but also acts as a catalyst for positive change in the world of AI.
“Three market makers – ZM Quant, CLS Global and MyTrade – and their employees are accused of allegedly laundering transactions and/or conspiring to launder transactions on behalf of NexFundAI, a cryptocurrency company and token created “at the direction of law enforcement as part of the government’s investigation,” the DoJ said.
“A fourth market maker, Gotbit, its CEO and two of its directors are also accused of perpetrating a similar scheme.”
A total of 18 individuals and entities were caught in the net of the investigation, among which five defendants either pleaded guilty or agreed to plead guilty. Three other defendants were arrested in the US state of Texas, the United Kingdom and Portugal.
More than $25 million in cryptocurrencies were also confiscated and several trading bots behind wash trading (aka round trip trading), which refers to the illegal practice of buying and selling the same financial instruments to create a trading business. artificial market, because around 60 different cryptocurrencies were seized. been disabled.
Court documents allege that the defendants behind the cryptocurrency companies executed fake trades using their own tokens to make them appear to be good investments in an attempt to attract new investors and buyers, thus synthetically inflating the trading prices of the tokens.
The individuals then sold their tokens at the new prices, a fraudulent scheme known as “pump-and-dump,” in order to illegally profit from financial crime.
The following individuals and cryptocurrency companies have been charged:
- Aleksei Andriunin, Fedor Kedrov, Qawi Jalili, Gotbit Consulting LLC (Gotbit)
- Riqui Liu, Baijun Ou, ZM Quant Investment LTD (ZM Quant)
- Andrey Zhorzhes, CLS Global FZC, LLC (CLS)
- Liu Zhou, MyTrade MM
- Manpreet Kohli, Haroon Mohsini, Nam Tran, Max Hernandez, Russell Armand, Vy Pham, Saitama LLC (Saitama)
- Robo Inu Finance (Robo Inu)
- Michael Thompson, VZZN, and
- Bradley Beatty, Lillian Finance LLC (Lillian Finance)
“Today’s enforcement actions demonstrate, once again, that retail investors are victims of fraudulent activities by institutional players in crypto asset markets,” said Sanjay Wadhwa, deputy director of the SEC Enforcement Division.
“With so-called promoters and self-proclaimed market makers colluding to target the investing public with false promises of profits in crypto markets, investors should be aware that the dice may be stacked against them.”
