US charges 4 companies, 14 individuals with crypto fraud

Four cryptocurrency companies and 14 individuals have been charged in what US prosecutors described as the first criminal prosecution targeting market manipulation and fraudulent trading in the crypto industry.

According to Reuters, the companies involved (Gotbit, ZM Quant, CLS Global and MyTrade) are accused of participating in fraudulent practices designed to manipulate crypto markets.

The U.S. Department of Justice in Boston announced the charges following an extensive investigation that led to arrests abroad. Five people either pleaded guilty or agreed to do so, according to Reuters.

Some of the people in the indictment resided in Hong Kong and the United Kingdom, and some resided in the USA.

Illegal crypto activities

The charged conduct included conspiracies to defraud investors through illegitimate advertising, market manipulation, manipulative trading, use of multiple wallets, online marketing, messaging apps and artificially inflating crypto prices, according to the indictment document.

Gotbit, one of the key companies involved in the incident, has faced numerous allegations of unethical behavior in the past. The company is no stranger to controversy, having previously been linked to several “rug pull” scams in which developers disappear with investor funds.

Gotbit has previously admitted to engaging in questionable business practices, further cementing its notoriety in the crypto space.

United States-based ZM Quant offered services that appeared to be a market maker. But these services allegedly include manipulative tactics such as fake trading, creating fake volume to inflate token prices, and misleading investors, according to court documents.

These charges highlight concerns about market integrity in the crypto space, as federal prosecutors have noted that crypto firms are subject to scrutiny similar to traditional financial institutions. This case marks one of the first criminal cases filed against companies like ZM Quant for such behavior.