U.S. federal prosecutors have charged 18 individuals and entities, including four cryptocurrency companies and several market makers, with widespread fraud and market manipulation. These companies and individuals were involved in schemes to artificially inflate the prices of cryptocurrencies through deceptive practices such as "wash trading" and false statements about the tokens. Wash trading involves repeatedly buying and selling assets to create the illusion of high trading activity and market interest.
The market makers, including ZM Quant, CLS Global, Gotbit, and MyTrade MM, were paid to conduct these fraudulent trades. The goal was to manipulate prices and attract unsuspecting investors, who would purchase the tokens at artificially high prices, allowing the manipulators to sell at inflated values in what is commonly known as a "pump and dump" scheme.
Authorities have seized over $25 million in cryptocurrency, and four defendants have pleaded guilty so far. As part of the investigation, the FBI took the innovative step of creating a cryptocurrency token to help expose the fraudsters.
