Investors were deceived by artificial trading volume and price manipulation.
The Securities and Exchange Commission (SEC) has filed fraud charges against three companies and nine individuals for engaging in schemes to manipulate the markets for various crypto assets sold as securities to retail investors. The SEC alleged that the parties involved created the illusion of active trading to lure investors into purchasing these assets. The promoters hired market makers to carry out this market manipulation by artificially inflating trading volumes and prices of crypto assets. This involved using tactics like wash trading to generate billions of dollars in artificial trading volume every day.
Sanjay Wadhwaof, Deputy Director of the SEC’s Enforcement Division, said: “Retail investors are victims of fraudulent activity by institutional players in the crypto asset markets…investors must be aware that the game can be played against them.
The SEC complaints highlighted collaboration between the SEC and the Federal Bureau of Investigation (FBI), revealing that a crypto asset created as part of an FBI operation was also manipulated by market makers.
Under the direction of the Lord, pray with us…
- For Deputy Director Wadhwaof’s discernment as he oversees the SEC’s Enforcement Division.
- For FBI officials seeking to prevent cryptocurrency fraud.
Sources: Reuters
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