US Authorities Crack Down on Cryptocurrency Fraud: 3 Firms, 15 Individuals Charged in Multimillion-Dollar ‘Pump and Dump’ Scheme

The US has accused three digital currency companies and fifteen individuals, two of whom have connections in Hong Kong, of fraudulent activities. The prosecutors allege that these defendants performed bogus transactions to falsely boost the trade volume of cryptocurrency tokens.

The US Federal Bureau of Investigation (FBI) has, for the first time, led the development of a new digital coin to assist in uncovering illegal activities. This unique approach has resulted in charges against three crypto firms and 15 individuals for their involvement in extensive fraudulent activities and market manipulation.

U.S. attorneys in Boston have indicted companies including Gotbit, ZM Quant, CLS Global along with their respective executives and staff members in a crackdown that has resulted in four detentions, five individuals agreeing to plead guilty, and the confiscation of cryptocurrencies valued at more than $25 million.

Acting US Attorney Joshua Levy stated that the accused orchestrated false transactions to unnaturally boost the trade volume of different cryptocurrency tokens prior to selling them, "resulting in unsuspecting investors being left at a loss".

"In this instance, modern technology in the form of cryptocurrency, intersects with a classic scam – the 'pump and dump' scheme, which has been around as long as the stock markets," Levy informed the press.

During the inquiry, the FBI orchestrated the establishment of a cryptocurrency firm, NexFundAI. This company had a token on the Ethereum blockchain, which, according to prosecutors, was agreed to be manipulated by ZM Quant, CLS Global and another firm, MyTrade.

Officials reported that a token was exchanged, but they meticulously supervised the process to limit the chance of retail investors purchasing it prior to halting trading. The US Securities and Exchange Commission also lodged corresponding civil lawsuits.