Federal regulators have highlighted three crypto exchanges, including Gotbit, ZM Quant, and CLS Global, citing that they will face legal action for offenses related to market manipulations. Interestingly, the court action will involve the trading platform leaders and other employees, underscoring an all-encompassing legal action.
It is worth noting that the United States Securities and Exchange Commission (SEC) filed the lawsuit in the District Court of Massachusetts. Interestingly, other entities, including the Justice Department and the Federal Bureau of Investigation (FBI), showed interest in the case, with active involvement in the legal procedures.
The SEC’s statement read in part: “The Securities and Exchange Commission today announced fraud charges against three companies purporting to be market makers and nine individuals for engaging in schemes to manipulate the markets for various crypto assets being offered and sold as securities to retail investors.”
Offences Overview
As earlier stated, the baseline of the court action against the highlighted crypto exchanges was mainly market manipulation. For context, ZM Quant allegedly offered market-making services for cryptocurrencies. Interestingly, Baijun Ou, Ruiqi Liu, and two anonymous individuals associated with the exchange maneuvered trading volume and crypto asset prices, accumulating riches for themselves.
Like ZM Quant, Gotbit also partook in similar nefarious acts. While the former allegedly inflated Saitama’s token price via a private Telegram group, the latter did the same with the Robo Inu token, inflating its trading volume to about $1 million.
FBI’s Role in Hastening Investigation Procedures
As part of concentrated efforts to identify the culprits, the FBI rolled out a new initiative labeled an FBI sting operation. The innovation entails developing a fake token, “The NexFundAI Token.” By leveraging the false coin, the FBI successfully deceived the scammers into offering fraudulent trading services. Hence, with its invention, the FBI added a new dimension to the successful investigational procedures.
#Fedcoin? well, not THAT Fed Coin – #NexFundAI was a coin created at the direction of the #FBI (yes that FBI) "as part of its undercover investigation of #crypto asset market #manipulation"; #SEC brings 5 cases vs MMs, two involve a FBI created coin! https://t.co/knVktsUS1o
— Drew Hinkes (@propelforward) October 9, 2024
Admitting FBI’s contribution, the SEC stated in its press release: “The SEC appreciates the assistance of the FBI and the United States Attorney’s Office for the District of Massachusetts, which announced parallel criminal actions today.”
