Three so-called market makers in the crypto space, along with associated individuals, have been charged by the United States Securities and Exchange Commission (SEC) with fraud and market manipulation in civil suits filed in the District Court of Massachusetts. The Justice Department and Federal Bureau of Investigation (FBI) were also involved in the investigation.

The suits were filed Oct. 9 against Gotbit Consulting, ZM Quant Investment and CLS Global. In addition, two suits were filed against individuals associated with the cases against the firms. A total of nine individuals were charged, the SEC  said .

An elaborate web of violations

Gotbit Consulting and its marketing director Fedor Kedrov are accused of market manipulation through wash trading on the behalf of individuals promoting cryptocurrencies called Saitama and Robo Inu. Wash trading is the practice of self-trading to create the impression of market interests.

Those crypto projects were organized by Vy Pham, a Vietnamese citizen living in California. She was charged separately with unregistered securities offerings, fraud in the offer or sale of securities, fraud in the purchase or sale of securities and market manipulation. 

Four people associated with Pham were sued separately on similar allegations. Pham and two of her associates consented to bifurcated settlements, allowing components of the charges against them to be settled separately.

The other two firms, ZM Quant Investment and CLS Global, face nearly identical charges in relation to a coin called NexFundAI. That cryptocurrency was created by the FBI. In addition, ZM Quant and the four individual associated with Pham were charged concerning another crypto asset, the SaitaRealty coin.

SEC, FBI, DOJ coordinate takedown of 4 fraudulent crypto firms image 0

Some of the services offered by Gotbit. Source: Gotbit

A far-flung search for justice

Kedrov is believed to reside in Russia. The ZM Quant executives named in that suit live in London, England, and Hong Kong. One of the four people charged in the fifth suit lives in India. Nonetheless:

“The complaints seek permanent injunctions, conduct-based injunctions, disgorgement of allegedly ill-gotten gains plus interest, and civil penalties against all the defendants, as well as officer and director bars against certain defendants.”

In a separate statement, the FBI  listed  more cryptocurrencies under investigation for a total of Saitama, SaitaRealty, SaitaChain, Robo Inu, VZZN, Lillian Finance and NexFundAI.

SEC, FBI, DOJ coordinate takedown of 4 fraudulent crypto firms image 1

Source: Unusual Whales

The Justice Department  lists  a total of 18 people facing charges in the combined cases and one additional company: MyTrade MM, which also offered services to NexFundAI.

The founders of the VZZN and Lillian Finance coins have also been charged, according to the Justice Department. The founder of VZZN had connections to Saitama, but that is the only connection the two coins seem to have to the rest of the investigation.

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