Neiron Market Maker was arrested in the United States for defrauding investors, revealing collaborations with several CEX and TON game token projects.

On the 10th of this month, US prosecutors filed charges against four cryptocurrency-related companies and 14 individuals. The list includes Gotbit, ZM Quant, CLS Global, and MyTrade, with Gotbit being an active market maker in meme coins such as DUKO, PENG, PONKE, SOLAMA, MYRO, and BONK. Particularly noteworthy is that Gotbit had previously announced early this month that it had established a cooperative relationship with the Ethereum Neiro meme coin, which was successfully listed for spot trading in the "Upper and Lower Case Neiro Chaos" event. SEC Strikes Against Market Makers! Accuses Cumberland DRW of Operating as an Unregistered Securities Dealer and Promoting Specific Coins.

FBI Returns with a Full Net, Four Market Makers Arrested

Reports cited prosecutor Joshua Levy, who stated that these companies are accused of creating false trades and artificially inflating the trading volume of various cryptocurrency tokens before selling them. Joshua Levy told reporters, "This is a case where cutting-edge cryptocurrency technology meets old-school fraud. It's a pump-and-dump scheme, as old as the stock market itself."

Notably, the FBI's investigation method this time involved instructing the creation of a cryptocurrency company NexFundAI on the Ethereum blockchain, with prosecutors alleging that ZM Quant, CLS Global, and another company MyTrade agreed to help manipulate the token.

Aleksei Andriunin, the CEO of the cryptocurrency market maker Gotbit residing in Russia and Portugal, was arrested in Portugal on Tuesday. Two employees of his company in Russia also face similar charges.

ICO-Originated Market Maker, Generating Fake Trading Volume through Algorithms

Founded in the 2018 ICO boom, Gotbit was originally started by a 20-year-old Russian university student named Alexey Andryunin. As early as 2019, Coindesk exposed Gotbit's business of falsifying trading volumes, charging $8,000 for listing on small exchanges at that time, and $6,000 per month for generating fake trading volumes by mimicking normal market activities. To get the token listed on CoinMarketCap, it would cost $15,000.

Considering the market conditions at that time, such practices were deemed reasonable. Even Bitwise believed that at that time, about 95% of Bitcoin trading volume was fake. Alexyey Andryunin mentioned that the exchanges were aware of Gotbit's bots manipulating trading volumes of certain altcoins, but higher volumes aligned with the interests of these exchanges. He also mentioned that these exchanges would charge several bitcoins, approximately $20,000 at the time, as a listing fee.

Collaboration with Several Well-Known Meme Coins, Online Detectives Warned of Gotbit's Operations a Year Ago

On July 19, Gotbit announced a partnership with NextGemAI, unaware that it was the bait set by the FBI. Earlier on April 9, they also announced a collaboration with TON Chain GameFi Hamster. On the 3rd of this month, Gotbit also stated a longstanding relationship with Neiro, an Ethereum-based project, but after the incident, Neiro's official account also announced the termination of the partnership with Gotbit.

A year ago, KOL ZachXBT warned about Gotbit's market-making behavior, stating that Gotbit's pattern was to "pump the price up 10x in the first few minutes of price discovery to create FOMO and sell tokens at the subsequent peak." Consequently, he also questioned why the official team chose to collaborate with a notorious market maker under Neiro's post announcing the end of the partnership.

CryptoQuant Founder: Regulatory Intervention Helps Remove the Speculative Image of Cryptocurrencies

The CTO of Neiro stated that Neiro is a community-led meme coin with no capital. When Sun Yuchen mentioned listing Neiro on Huobi, Neiro's team had only a few hours to find a suitable market maker, and Gotbit was one of the few market makers in contact with the team. Additionally, Gotbit offered the best conditions among market makers, and the team signed a three-month contract with Gotbit as a short-term solution for listing on Huobi. Neiro was aware of Gotbit's bad reputation but, given the lack of reputable options in the industry, they did not consider it a significant issue.

Gotbit's notorious reputation can be seen from its recent involvement with several meme coins like BEER and ANALOS. These tokens were listed on secondary exchanges but also showed clear signs of price manipulation.

The founder of CryptoQuant, Ki Young Ju, expressed a positive outlook on this, stating, "Cryptocurrencies will soon face regulation; it's only a matter of time. Regulations will help eliminate the gambling stigma associated with them."

It is worth noting that both the latest international exchange listing, Hamster, and the exchange Bitget have publicly collaborated with Gotbit, and as of the deadline, neither has commented on the situation. Bitget, in fact, was the most recent partner of Gotbit before the arrest, adding to the unresolved aspects of the whole incident.