The U.S. SEC has charged three market makers and nine individuals for manipulating the crypto asset market, generating artificial trading volumes and misleading retail investors. The fraudulent schemes created the illusion of active markets, prompting unsuspecting investors to pour money into manipulated crypto assets. The DOJ filed criminal charges against the scheme operators in a parallel transaction.

Key Points:

• The SEC charges three companies and nine individuals for market manipulation schemes targeting crypto assets sold as securities.
• These companies created false trading volumes and manipulated prices to lure retail investors.
• The manipulation involved self-trading and using bots to generate artificial volume, deceiving investors into believing in active markets.
• Parallel criminal actions have been announced by the FBI and the U.S. Attorney’s Office for the District of Massachusetts.

Short Narrative:

The U.S. Securities and Exchange Commission (SEC) has filed fraud charges against three companies and nine individuals involved in a massive market manipulation scheme targeting crypto assets. The SEC alleges that market makers ZM Quant, Gotbit, and CLS Global, along with promoters Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, Nam Tran, and Vy Pham, conspired to create a false appearance of active trading in crypto assets. By using artificial trading volume and price manipulation, they misled retail investors into purchasing these assets in unregistered transactions.

These fraudulent activities, often involving self-trading or “wash trading,” generated billions of dollars in fake trading volume daily through algorithms and bots. The SEC’s actions aim to put a stop to these deceptive practices, which have caused significant financial harm to investors. The agency has filed five complaints in the U.S. District Court for the District of Massachusetts, seeking injunctions, penalties, and disgorgement of profits from the defendants.

Actionable Insight:

Crypto traders and investors should exercise caution when participating in markets with unusually high trading volumes. Market manipulation schemes like these can result in significant financial losses, especially for retail investors who are often the primary targets.

Call for Information: FinTelegram is looking for insights into other companies or individuals involved in similar market manipulation schemes. Are there other platforms using fake trading volumes to mislead investors?