The US Department of Justice (DoJ) has announced the arrests and indictments of several individuals and entities in connection with the alleged manipulation of digital asset markets as part of a widespread fraud operation.
The action of law enforcement officers is a code name Operation Token Mirrors – is the result of the US Federal Bureau of Investigation (FBI) taking the “unprecedented step” of creating its own cryptocurrency token and company called NexFundAI.
According to information on the website, NexFundAI was touted 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 secure store of value, but also acts as a catalyst for positive change in the world of artificial intelligence.” intelligence”.
“Three market makers — ZM Quant, CLS Global, and MyTrade — along with their employees are charged with alleged improper trading and/or conspiracy to launder money on behalf of NexFundAI, a cryptocurrency and token company created at the direction of law enforcement as part of a government investigation.” Ministry of Justice said.
“A fourth Gotbit market maker, its CEO and two of its directors are also accused of perpetrating a similar scheme.”
A total of 18 persons and organizations were caught up in the investigation, of which five defendants admitted or agreed to admit their guilt. Three other defendants were arrested in the US state of Texas, Great Britain and Portugal.
More than $25 million in cryptocurrency and several trading bots were also seized wash trade (aka back-and-forth trading), which refers to the illegal practice of buying and selling the same financial instruments to create artificial market activity, as around 60 different cryptocurrencies have been disabled.
Court documents allege that the defendants behind the cryptocurrency companies made fake trades using their own tokens to create the impression that they were good investments in an attempt to attract new investors and buyers, thereby artificially inflating the trading prices of the tokens.
People then sold their tokens at the new prices, a scam known as pump and dumpto profit illegally from a financial crime.
The following cryptocurrency individuals and companies have been charged –
- Alexey Andriyunin, Fedor Kedrav, Kavi Jalili, Gotbit Consulting LLC (Gotbit)
- Riqui Liu, Baijun Ou, ZM Quant Investment LTD (ZM Quant)
- Andrei Georges, CLS Global FZC, LLC (CLS)
- Liu Zhou, MyTrade MM
- Manpreet Kohli, Haroon Mosini, Nam Tran, Max Hernandez, Russell Armand, Wee Pham, Saitama LLC (Saitama)
- Robo Inu Finance (Robo Inu)
- Michael Thompson, VZZN, and
- Bradley Beatty, Lillian Finance LLC (Lillian Finance)
“Today’s enforcement action demonstrates once again that retail investors are being victimized by institutional actors in the crypto-asset markets,” Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement, said.
“With alleged promoters and self-anointed market makers teaming up to target investment with false promises of returns in the crypto markets, investors should remember that the deck may be stacked against them.”
