US Charges Four Crypto Firms For Market Manipulation

Federal prosecutors in Boston charged Gotbit, ZM Quant, CLS Global, and MyTrade, along with their leaders and employees, with market manipulation and sham trading in cryptocurrency.

The investigation led to arrests abroad, and five people have already pleaded guilty or agreed to do so. The prosecution is, above all, regarded as a milestone in efforts to root out fraud in the crypto industry.

US Cracks Down on Market Manipulation and Crypto Fraud: Five Plead Guilty

Four companies involved—Gotbit, ZM Quant, CLS Global, and MyTrade—and their 18 leaders and employees face charges related to market manipulation.

BOSTON, Oct 9 (Reuters) – Four cryptocurrency companies and 14 individuals have been charged in what U.S. prosecutors on Wednesday said was the first criminal prosecution of financial services firms for market manipulation and sham trading in the crypto sector.

Federal…

— db (@tier10k) October 9, 2024

The investigation, led by federal prosecutors in Boston, involved overseas arrests. So far, five have pleaded guilty. Some agreed to plead guilty in a significant movement in the crackdown on fraudulent dealings within the crypto space.

This is among the first criminal prosecutions targeting financial services firms within the crypto sector. The crackdown marks one of the serious ways the US seeks to crack down on fraudulent activities within the cryptocurrency market.

A few days ago, blockchain investigator ZachXBT helped track down and recover approximately $275,000 in stolen cryptocurrency. The owner had become the victim of a social engineering scam, which had stolen around $5 million from its targets.

This recovery sheds light on some of the great vulnerabilities inside the crypto community. It showed how important such investigations are in tracking and recovering stolen digital assets.

The individuals charged in the recent crypto market manipulation and sham trading case span several countries. Some accused were based in Hong Kong and the United Kingdom, while others lived in the United States.

This international dimension of the investigation underlines the global nature of virtual currency fraud. With arrests and charges filed across different jurisdictions, the crackdown underlines the US government’s effort to combat fraudulent practices within the cryptocurrency industry.

Gotbit, ZM Quant Indicted in US Crypto Fraud Case

The indictment touches on a variety of alleged activities. That includes conspiracy to defraud investors by making false advertising, market manipulation, and manipulative trading activities. Several wallets, online marketing strategies, messaging applications, and tactics aimed at artificially inflating cryptocurrency prices were also highlighted as part of the alleged wrongdoing​.

Gotbit is one of the companies-actors in this case and has a history of unethical dealings. Previously, it had problems with several “rug pull” scams, where developers disappeared with the investors’ money. All of these furthered Gotbit’s reputation as quite a controversial company within the cryptocurrency space.

Even more audacious, Gotbit has boasted openly about its questionable business practices to reinforce its notorious status. The firm was cited for involvement in activities with potential impacts on people’s conduct of unethical behavior and “rug pull” scams​.

ZM Quant is another US-based firm caught up in the recent charges and claimed market manipulation. Court documents detail that those services included manipulative acts like wash trading. This was done to create an appearance of higher trading volume, thereby deceiving investors over token prices.

These allegations have severe implications for market integrity in the crypto industry. Federal prosecutors have made it known that, henceforth, the same level of scrutiny accorded to traditional financial institutions will be applied to cryptocurrency firms.

This represents one of the first criminal actions against firms like ZM Quant for manipulative activities, a gesture toward changing regulation and accountability in the cryptocurrency space.

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Teuta

Teuta is a seasoned writer and editor with over 15 years of experience in macroeconomics, technology, and the cryptocurrency and blockchain industries. Starting her career in 2005 as a lifestyle writer for Cosmopolitan in Croatia, she expanded into covering business and economy for several esteemed publications like Forbes and Bloomberg. Influenced by figures like Don Tapscott and Bruce Dickinson, Teuta embraced the blockchain revolution, believing crypto to be one of humanity’s most crucial inventions. Her fintech involvement began in 2014, focusing on crypto, blockchain, NFTs, and Web3. Known for her excellent teamwork and communication skills, Teuta holds a double MA in Political Science and Law, enjoys punk rock, chablis, and has a passion for shoes.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.