Four Companies, 14 Individuals Charged in U.S. Crypto Fraud Case

In a landmark move, U.S. prosecutors have charged four cryptocurrency companies and 14 individuals in the first-ever criminal prosecution targeting market manipulation and sham trading within the crypto industry. The accused firms—Gotbit, ZM Quant, CLS Global, and MyTrade—allegedly engaged in fraudulent practices that manipulated cryptocurrency markets, according to a Reuters report.

The U.S. Department of Justice (DOJ) in Boston led the investigation, which resulted in arrests across multiple countries. Among the 14 individuals, some resided in the U.S., while others were based in Hong Kong and the United Kingdom. Five individuals have either pleaded guilty or are expected to do so, further advancing the case.

Uncovering Fraudulent Crypto Activities

According to the indictment, the defendants conspired to defraud investors through illicit tactics like market manipulation, sham trades, and deceptive advertising. They also used various wallets, messaging platforms, and social media marketing to artificially boost cryptocurrency prices.

One of the key players, Gotbit, has a tainted history in the crypto world. The company has been linked to several fraudulent schemes, including “rug pulls,” where developers suddenly disappear with investors’ funds. Despite previously admitting to engaging in questionable practices, Gotbit continues to face allegations of unethical behavior.

ZM Quant, another implicated firm, is accused of offering market-making services that were anything but legitimate. Court documents reveal that ZM Quant allegedly engaged in wash trading, a tactic where fake trading volume is generated to inflate token prices and mislead investors.

These criminal charges underscore growing concerns over the integrity of the cryptocurrency market. Federal prosecutors emphasized that crypto firms must adhere to the same regulatory scrutiny as traditional financial institutions. This case marks a pivotal moment, as it is one of the first criminal actions against crypto companies like ZM Quant for fraudulent activities.

As this case unfolds, it highlights the increasing efforts by authorities to hold crypto firms accountable for their actions, ensuring market transparency and investor protection.