Crypto Fraud Investigation Backed by FBI Leads to Big Charges

An FBI-led investigation involving a newly created digital token led to five criminal charges against three cryptocurrency companies and 15 individuals, all stemming from fraud and market manipulation, federal prosecutors said.

In a broad securities fraud and market manipulation complaint filed by federal prosecutors in Boston, three cryptocurrency companies, Gotbit, ZM Quant and CLS Global, along with 15 individuals, were charged. This landmark investigation put the FBI in an unprecedented position of creating a digital coin, NexFundAI, as an investigatory tool.

The case was presented by Levy in a speech that also included mention of four arrests and a plea agreement involving five other defendants. Prosecutors say the defendants committed trades that were not real in order to create trading volume pressure on various tokens, whose eventual outcome was losing the investment worth to innocent victims.

“This is a case both where high-tech gadgets have been incorporated in the traditional way of defrauding victims like pumping and dumping,” Levy compared it to ‘pump and dump’ schemes that the new technology has beat them in.

There was evidence that ZM Quant, CLS Global and MyTrade were the ones pegging the price of NexFundAI token towards the Ethereum blockchain manipulative trading of the said token which had a trading ban imposed to safeguard retail investors from abuse. Related civil complaints have also been lodged by the U.S. Securities and Exchange Commission.

Falling under the same charge is Manpreet Kohli in the UK, who is the chief executive officer of Saitama. Saitama’s token was at one time valued at $7.5 billion which plummeted after the leadership decided to engage in shoe shining the token and trading it. Other defendants include Gotbit’s Aleksei Andriunin, who was arrested in Portugal, and some employees from other market-making companies.

The accusations point to persistent worries over con artists gaining traction as the cryptocurrency market continues to develop at a breakneck pace.