US Indicts 26-Year-Old Gotbit Founder For Market Manipulation (crypto.news) 21
The feds have indicted Aleksei Andriunin, a 26-year-old Russian national and founder of Gotbit, on charges of wire fraud and conspiracy to commit market manipulation. Crypto News reports: According to the U.S. Attorney's Office, the indictment alleges that Andriunin and his firm participated in a long-running scheme to artificially boost trading volumes for various cryptocurrency companies, including some based in the United States, to make them appear more popular and increase their trading value. Andriunin allegedly led these activities between 2018 and 2024 as Gotbit's CEO. He could face up to 20 years in prison, additional fines, and asset forfeiture if convicted, according to the U.S. Attorney's Office. Prosecutors say the scheme involved "wash trading," where the firm used its software to make fake trades that inflated a cryptocurrency's trading volume. This practice, called market manipulation, can mislead investors by giving the impression that demand for a particular cryptocurrency is higher than it actually is. Wash trades are illegal in traditional finance and are considered fraudulent because they deceive investors and manipulate market behavior.
Court documents also identify Gotbit's two directors, Fedor Kedrov and Qawi Jalili, as co-conspirators. The indictment claims Gotbit documented these activities in detailed records, tracking differences between genuine and artificial trading volumes. The firm allegedly pitched these services to prospective clients, explaining how Gotbit's tactics would bypass detection on public blockchains, where transactions are recorded transparently. The U.S. Department of Justice has announced that it seized over $25 million worth of cryptocurrency assets connected to these schemes and made four arrests across multiple firms. If you've been following the crypto industry, you're probably familiar with "pump-and-dump" schemes that have popped up throughout the years. Although it's a form of market manipulation, it's not quite the same as "wash trading."
In a pump-and-dump scheme, the perpetrator artificially inflates the price of a security (often a low-priced or thinly traded stock) by spreading misleading or exaggerated information to attract other buyers, who then drive up the price. Once the price has risen due to increased demand, the manipulators "dump" their shares at the inflated price, selling to the new buyers and pocketing the profits. The price typically crashes after the dump, leaving unsuspecting investors with overvalued shares and significant losses.
Wash trading, on the other hand, involves simultaneously buying and selling of the same asset to create the illusion of higher trading volume and activity. The purpose is to mislead other investors about the asset's liquidity and demand, often giving the impression that it is more popular or actively traded than it actually is. Wash trades usually occur without real changes in ownership or price movement, as the buyer and seller may even be the same person or entity. This tactic can manipulate prices indirectly by creating a perception of interest, but it does not involve a direct inflation followed by a sell-off, like a pump-and-dump scheme.
Court documents also identify Gotbit's two directors, Fedor Kedrov and Qawi Jalili, as co-conspirators. The indictment claims Gotbit documented these activities in detailed records, tracking differences between genuine and artificial trading volumes. The firm allegedly pitched these services to prospective clients, explaining how Gotbit's tactics would bypass detection on public blockchains, where transactions are recorded transparently. The U.S. Department of Justice has announced that it seized over $25 million worth of cryptocurrency assets connected to these schemes and made four arrests across multiple firms. If you've been following the crypto industry, you're probably familiar with "pump-and-dump" schemes that have popped up throughout the years. Although it's a form of market manipulation, it's not quite the same as "wash trading."
In a pump-and-dump scheme, the perpetrator artificially inflates the price of a security (often a low-priced or thinly traded stock) by spreading misleading or exaggerated information to attract other buyers, who then drive up the price. Once the price has risen due to increased demand, the manipulators "dump" their shares at the inflated price, selling to the new buyers and pocketing the profits. The price typically crashes after the dump, leaving unsuspecting investors with overvalued shares and significant losses.
Wash trading, on the other hand, involves simultaneously buying and selling of the same asset to create the illusion of higher trading volume and activity. The purpose is to mislead other investors about the asset's liquidity and demand, often giving the impression that it is more popular or actively traded than it actually is. Wash trades usually occur without real changes in ownership or price movement, as the buyer and seller may even be the same person or entity. This tactic can manipulate prices indirectly by creating a perception of interest, but it does not involve a direct inflation followed by a sell-off, like a pump-and-dump scheme.
Additional Fines (Score:4, Funny)
The additional fines are $19,999,999,999,999,999,999,999,999,999,999.99 USD. We accept Visa and MasterCard, but not American Express.
Another young idiot... (Score:2)
... that thinks he has it all figured out. Here is a hint: At that age, you cannot. Not possible.
Naked short selling should be looked at (Score:2)
Daily there are large funds short selling small cap stocks without a viable way to borrow the shares to sell.
It should be looked into, with fund closures, fines and industry bans.
Re: (Score:2)
Didn't seem to bother the Bush boys, pump and dump has been their family's go-to for quick cash for over half a century. Of course none of them ever went to jail for it, not even an SEC fine. They keep up the fine family tradition that way, their grandfather got a bank, steel mill and shipping line confiscated during WWII for 'Trading With The Enemy', and their dad laundered money for the CIA for decades before he became CIA Director. I see their kids are following in their footsteps.
Two scoops of crime in every token (Score:2)
Re: (Score:2)
Honestly, if I was a stockmarket fraud cop type, I'd just go and ravage the cryptoscammers that dominate twitter now that most of the normal people have abandoned that site. Its a whole verdant field of fraudulent idiots ready for the harvesting.
Who does this guy think he is? (Score:2)
Citadel?
Re: (Score:2)
Re: (Score:2)
You copy/paste this every thread even vaguely mentioning crypto-currency. Don't you have any new material? This one is kind of boring.
NO regulation YET fines and imprisonment (Score:1)
The whole point of cryptocurrency (other than allowing gambling and pretending it's investing) is that it's DECENTRALIZED and NON-GOVERNMENT regulated.
So, how is that anyone is charged with a crime for "saying" "things" "online" about a "nonexistent" "mathematical formula result" online?
Seriously. Think about it. I'm not quite "getting" how an ABSOLUTELY NOTHING that is PURE MATH that people TALK ABOUT on the Internet (whether on a forum, through an app, or on a blockchain) is SOMEHOW something the Govern
Re: (Score:2)
Re: (Score:2)
The whole point of cryptocurrency (other than allowing gambling and pretending it's investing) is that it's DECENTRALIZED and NON-GOVERNMENT regulated.
So, how is that anyone is charged with a crime for "saying" "things" "online" about a "nonexistent" "mathematical formula result" online?
Seriously. Think about it. I'm not quite "getting" how an ABSOLUTELY NOTHING that is PURE MATH that people TALK ABOUT on the Internet (whether on a forum, through an app, or on a blockchain) is SOMEHOW something the Government gets to REGULATE and FINE and IMPRISON for.
Help a brother out. Don't downvote. ANSWER>.
You can commit check fraud with just a pencil, I'm not sure why you think adding "on the internet" somehow makes you immune to wire fraud. Good luck with your I was Saying Things, the Point is it's Unregulated, therefore I can't commit crime sovereign citizen defense.
If you've been following the crypto industry, (Score:3)
NOPE
I haven't heard anyone mention bitcoin out loud in at least two years, except perhaps in jest
Aren't scams crypto's main usage? (Score:2)
Re: Aren't scams crypto's main usage? (Score:2)
Drugs, guns, laundering, and kiddy porn.
Re: (Score:2)
The guys using crypto to launder money are the small fish. Move $100 million (the wholesale value of a five ton shipment of coke) in Bitcoin and you make headlines on SlashDot, move $100 million on the NYSE and the only person who notices is your broker. Large scale money laundering is so profitable that US Treasury Secretaries retire from 'public service' to run the money laundering, err, "private banking" divisions of Citicorp and Morgan Chase. (We're the world's largest money laundry, after all.)
Re: (Score:2)
Nah, large scale money laundering requires the services of Citicorp or the Hong Kong Stock Exchange, or maybe a highly motivated real estate broker. Crypto users are just the little fish.
If they are going after russians Next up (Score:2)
Shouldn't be illegal (Score:2)
People who don't perform a fundamental analysis of an asset before investing should just blame themselves. This kind of market "manipulation" should not be banned.