FBI issues coins to catch market makers! Counterfeiting trades amount to trillions in a single day, selling services to exploit investors.

The U.S. Securities and Exchange Commission (SEC), FBI, and Department of Justice have collaborated to bring fraud charges against three companies claiming to be market makers and nine individuals accused of fraud. The allegations include selling cryptocurrency as securities to retail investors, engaging in wash trading, and misleading investors into purchasing these assets.

High Trading Volume is Deceptive! SEC Exposes Cryptocurrency Market Manipulation

The SEC investigation revealed that several cryptocurrency promoters, including Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, Nam Tran, and Vy Pham, collaborated with companies claiming to be market makers. These market makers include ZM Quant, Gotbit, and CLS Global, which were hired to manipulate the prices and trading volumes of various cryptocurrencies, illegally selling these assets as unregistered securities.

Neiro's market maker caught by the U.S. for scamming, reveals continued collaboration with several CEX and TON game token projects

Market Manipulation by Gotbit: Wash Trading Saitama, Robo Inu

Gotbit and its marketing director Fedor Kedrov are facing market manipulation charges, accused of using a deceptive practice called "wash trading."

Wash trading is a method of artificially increasing trading volume by buying and selling the same asset, creating a false perception of high market demand. Gotbit is accused of conducting wash trades for promoting two cryptocurrency projects, Saitama and Robo Inu.

Vietnamese Shitcoin Expert Hires Market Makers to Exploit Investors

These cryptocurrency projects were all founded by Vietnamese citizen Vy Pham residing in California. Pham faces a range of charges, including unregistered securities issuance, securities fraud, and market manipulation, illustrating the complexity of fraud collaboration in the crypto market, where investors are misled into believing these tokens are highly popular through various means.

FBI Creates Coin to Entrap Market Makers, Gathers Evidence of Market Manipulation

As part of the investigation, the FBI instructed the creation of a cryptocurrency company NexFundAI, which has a token on Ethereum. Prosecutors stated that ZM Quant, CLS Global, and another company MyTrade all agreed to assist in manipulating the token.

The FBI stated that they closely monitored the token once it began trading to minimize the risk of retail investors purchasing it before trading was halted.

SEC Warns: Beware of Cryptocurrency Group Scams

Sanjay Wadhwa, head of the SEC's enforcement division, said, "Retail investors are being deceived by institutions in the cryptocurrency asset market." He warned investors to remain vigilant as promoters and self-proclaimed market makers collaborate to deceive the public.

The SEC also noted that ZM Quant and its employees Baijun Ou and Ruiqi Lau, Gotbit's employee Fedor Kedrov, and CLS Global's Andrey Zhorzhes were involved in manipulating the cryptocurrency market.

Trillions of Dollars in Trades Falsified to the Extreme

The SEC pointed out that in some cases, algorithms or bots generated a significant amount of false trading activity, with billions of false trades per day, and artificially created trading volumes reaching trillions of dollars each trading day. This created an illusion of a highly active market, deceiving investors into believing there was strong demand for these assets.

SEC Seeks Permanent Injunction

The SEC has filed five separate lawsuits in the United States, accusing the defendants of violating anti-fraud and market manipulation provisions of federal securities laws. The SEC is seeking multiple penalties, including:

• Permanent injunctions: Preventing the defendants from further violating federal securities laws
• Conduct injunctions: Prohibiting specific market activities
• Disgorgement of ill-gotten gains: Recouping alleged unlawful profits plus interest
• Civil penalties: Imposing economic penalties on the defendants

Furthermore, the SEC is seeking officer and director bars against specific defendants, prohibiting them from holding leadership positions in public companies in the future.

It is noteworthy that three defendants, Russell Armand, Maxwell Hernandez, and Vy Pham, have agreed to settle, permanently barring them from violating federal securities laws and from holding executive positions in the future.

Trading Key Players in Market Making Under Regulatory Scrutiny

In addition to the aforementioned small and medium-sized market makers, well-known market maker Cumberland DRW has also been sued by the SEC, alleging qualifications mismatch and trading unregistered securities, among others. This shows that the operators truly driving cryptocurrency market prices, engaging in wash trading arbitrage, serving various cryptocurrency projects, and assisting in asset sales, are likely facing tighter regulations than before.

SEC Cracks Down on Market Makers! Charges Cumberland DRW for Operating as Unregistered Securities Trader, Promoting Specific Coins