In unison, the SEC, the DOJ and the FBI have charged eighteen people and crypto companies, including Gotbit Consulting, ZM Quant Investment, and CLS Global. The charges centre on fraud and manipulation of the market and where wash trading was employed to push token prices higher.

The Informant of the FBI

To unravel these manipulations, the FBI constructed a faux token often known as NexFundAI on the Ethereum community. Market manipulators were arrested after agents used a form of sting to act as clients in order to be defrauded. The sting led to several arrests including individuals who boasted in the group about rigging token prices.

Gotbit’s Activity and Cheating Strategies

One of the charged entities, Gotbit, had said that in order to set the price to a ‘fair price’, they had sold $WATER tokens. However, it was found that Gotbit sold way more tokens than it actually bought, which debunked previous claims made by the company. 

This manipulation, coupled with the use of bots to generate fake trading volumes AAF earned the defendants millions by making investors develop the impression that there was high demand for the tokens.

• Also Read :
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International Aspect and Unique Experience of Prosecution

Some of them acted internationally for example from Russia and Portugal. Out of the accused individuals five of them have admitted guilt or are actively assisting in the hearings. 

This case is also the first criminal action by the DOJ against the manipulation of cryptos in the market, which is a big triumph in the fight against fraud in the emerging digital asset space.

The coordination between the FBI, SEC, and DOJ, as well as the use of the concept of a bogus token, raises the question of how forthcoming law enforcement plans to extort redeeming crypto scams.

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