Eighteen individuals and entities have been charged for their roles in an extensive cryptocurrency fraud and market manipulation scheme. These charges, unsealed in Boston, implicate the leaders of four cryptocurrency companies and four financial services firms, also known as “market makers.” The accused, which include executives and employees, are alleged to have participated in deceptive trading practices, inflating the value of cryptocurrencies to mislead investors. The scheme led to the seizure of over $25 million in cryptocurrency and the shutdown of automated trading bots responsible for millions of dollars in wash trades. 

The goal of wash trading is to: 

• Convince other traders to buy the cryptocurrency 
• Increase the price, reputation, and visibility of the cryptocurrency 
• Claim rewards on DeFi platforms 
• Artificially inflate prices 
• Create the impression of greater market liquidity 

The primary fraudulent tactic used in this scheme was a “pump and dump,” where defendants falsely inflated the value of their cryptocurrencies through wash trades to attract new investors. These wash trades gave the appearance of legitimate trading activity, artificially driving up the value of the tokens. Once the prices were sufficiently inflated, the defendants allegedly sold off their tokens for massive profits, leaving unsuspecting investors with worthless assets. The largest of the implicated companies, Saitama, once had a multi-billion-dollar market value, largely due to these deceptive practices.

The penalties for these crimes are severe. Charges of market manipulation and wire fraud each carry potential sentences of up to 20 years in prison, three years of supervised release, and fines of up to $5 million or twice the gross gain or loss from the offense. Additional charges, such as conspiracy to commit money laundering or wire fraud, carry similarly harsh penalties, including fines of up to $500,000 or double the value of the laundered property. These punishments reflect the government’s serious stance on curbing cryptocurrency-related fraud and protecting investors in this rapidly evolving market.

For a defense lawyer who is well versed in representing defendants in cryptocurrency fraud cases like this, there are several strategies to consider. First, it is important to conduct a detailed analysis of the evidence to determine whether the defendant had full knowledge of the fraudulent activities or was unknowingly caught up in the broader scheme. Cryptocurrency markets are complex and rapidly changing, and some clients may not have fully understood the legality of certain trading practices.

Second, cooperation with the authorities could be a critical component of the defense strategy. Demonstrating a willingness to assist in uncovering the full scope of the fraud could lead to reduced charges or lighter sentencing. Attorneys should explore plea deals or other forms of cooperation early in the legal process to mitigate the risks their clients face.

Third, defense attorneys should consider challenging the government’s interpretation of the cryptocurrency market and trading practices. While fraudulent activity should not be excused, the lack of clear regulations in the cryptocurrency space could provide grounds for disputing certain charges. In some instances, the defense may argue that actions taken by the defendant fell into a legal gray area rather than clear criminal conduct.

The recent charges of wash trading and widespread financial fraud and manipulation in the cryptocurrency markets come with serious legal consequences. Defendants could face decades in prison and hefty fines, but defense attorneys have several potential avenues for representation. Thoroughly understanding the evidence, exploring cooperation options, and challenging unclear regulations will be key strategies in these high-stakes cases.

If you find yourself facing federal charges for cryptocurrency fraud or participating in a crypto wash trade scheme then contact our offices today. It is important to remember that prosecutors will push for convictions and a sophisticated defense is necessary to defend these complex charges which could involve multiple people accused of different levels of complicity and access based on evidence that is technical and specialized in nature.

The attorneys at Dhar Law have experience defending those accused of these types of financial crimes and other crimes associated with Cryptocurrency. Please contact our experienced team of Cryptocurrency Defense Attorneys at 617-880-6155 to learn more.

Please read on for more of the specific charges in this case. 

The following individuals and entities have been charged in U.S. District Court in Boston, Mass.:

Aleksei Andriunin, Fedor Kedrov, Qawi Jalili, Gotbit Consulting LLC (Gotbit) – According to court documents, Gotbit was a well-known “market maker” in the cryptocurrency industry. Aleksei Andriunin, 26, of Russia and Portugal, was Gotbit’s Chief Executive Officer and Founder. Andriunin was arrested on Oct. 8, 2024 in Portugal and awaits extradition. Fedor Kedrov, of Russia, was Gotbit’s Director of Market Making. Qawi Jalili, of Russia was Gotbit’s Director of Sales. Gotbit, Kedrov and Jalili are each charged with wire fraud and conspiracy to commit market manipulation and wire fraud. Andriunin is also charged in a separate criminal complaint with wire fraud, conspiracy to commit market manipulation and wire fraud and conspiracy to commit money laundering.

It is alleged that between 2018 and 2024, Gotbit provided market manipulation and wash trading services to several cryptocurrency companies, including companies located in the United States. Gotbit allegedly made wash trades worth millions of dollars on behalf of clients and received tens of millions of dollars in proceeds for these illicit services. In a 2019 interview published online, Andriunin allegedly described how he developed a code to wash trade and artificially inflate cryptocurrency trading volume. Andriunin allegedly kept track of Gotbit’s market manipulation, including with spreadsheets that compared “Created Volume” from wash trades with naturally occurring “Market Volume.” Gotbit’s employees, including Jalili and Kedrov, allegedly described these wash trading tactics to prospective clients and how to avoid detection. Jalili and Kedrov also allegedly provided these services to multiple cryptocurrencies, including the Saitama and Robo Inu cryptocurrencies.

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Riqui Liu, Baijun Ou, ZM Quant Investment LTD (ZM Quant) – ZM Quant was a “market maker” in the cryptocurrency industry that allegedly advertised illicit market manipulation services to clients. Riqui Liu, 26, of the United Kingdom and Hong Kong, was an employee of ZM Quant. Baijun Ou, 32, of Hong Kong, was also an employee of ZM Quant. ZM Quant, Liu and Ou are each charged in a superseding indictment with wire fraud and conspiracy to commit market manipulation and wire fraud.

According to court documents, ZM Quant allegedly advertised a “trading bot” that could “create volume.” ZM Quant employees allegedly discussed these illicit services with clients through Telegram messages and during video teleconferences. For example, as alleged in the charging documents, during a video teleconference in March 2024, Liu and Ou described how ZM Quant would trade “maybe ten times per minute or twenty times a minute” to “increase the trading volume” and “pump the price.” Liu and Ou also described how ZM Quant allegedly used multiple trading wallets to avoid having the trading look “fake.” It is further alleged that ZM Quant provided market manipulation services for multiple cryptocurrency companies, including Saitama and NexFundAI.

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Andrey Zhorzhes, CLS Global FZC, LLC (CLS) – CLS was a “market maker” in the cryptocurrency industry that allegedly advertised illicit market manipulation services to its clients. Andrey Zhorzhes, of the United Arab Emirates, was an employee of CLS. Both CLS and Zhorzhes are charged in an indictment with wire fraud and conspiracy to commit market manipulation and wire fraud.

It is alleged that Zhorzhes described to a prospective client how CLS’s algorithm generated trading volume on multiple cryptocurrency exchanges, as follows: 

“We have an algorithm that . . . basically does self-trades, buying and selling.”

“The idea of volume generation is . . . so the token looks organic and looks live and people get interested in trading it.”

“It’s very hard to track. . ..We’ve been doing that for many clients.”

“I know that it’s wash trading and I know people might not be happy about it.”

Zhorzhes and other CLS traders allegedly provided these market manipulation services for NexFundAI.

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Liu Zhou, MyTrade MM – MyTrade MM was another “market maker” in the cryptocurrency industry that advertised illicit market manipulation services to its clients, including “pump and dump” consulting services and “wash trades” facilitated by “bots.” Liu Zhou, 39, of China and Canada, was the founder of MyTrade MM. Zhou is charged and has agreed to plead guilty to conspiracy to commit market manipulation and wire fraud.

MyTrade MM’s clients had access to a dashboard on MyTrade MM’s website through which clients specified the desired amount of daily wash trades on identified cryptocurrency exchanges. MyTrade MM’s dashboard described the service as “Volume Support” and allowed for millions in wash trades per day for each client cryptocurrency, for example:

In conversations with purported promoters of NexFundAI, Zhou allegedly described MyTrade MM as superior to “CLS” and “Gotbit” because those market makers “keep clients in the dark” and “control the pump and dump,” which means “they can do inside trading easily.” Zhou allegedly also described the various purposes for wash trading, including showing “continuous trading activity every hour”; generating large enough trading volumes for cryptocurrency exchanges to waive listing fees; and executing “pump and dumps.” According to court documents, Zhou further described that the “objective on the secondary markets” was to find “other buyers from the community, people you don’t know about or don’t care about” because “we have to make [the other buyers] lose money in order to make profit.”

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Manpreet Kohli, Haroon Mohsini, Nam Tran, Max Hernandez, Russell Armand, Vy Pham, Saitama LLC (Saitama) – Saitama was a cryptocurrency company, originally incorporated in Massachusetts in August 2021.

Manpreet Kohli, 43, of the United Kingdom, was the CEO of Saitama. Kohli was arrested in the United Kingdom on Oct. 7, 2024 and is awaiting extradition. Haroon Mohsini, 37, of Texas, also worked at Saitama. Mohsini was arrested on Oct. 7, 2024 in the Southern District of Texas. Nam Tran, 32, of Vietnam, worked at Saitama and is currently in Vietnam. Kohli, Mohsini and Tran are each charged in a superseding indictment with wire fraud, market manipulation, and conspiracy to commit wire fraud, commit market manipulation and conduct an unlicensed money transmitting business. Max Hernandez, 36, of Massachusetts, and Russell Armand, 42, of Texas, also worked at Saitama and are charged separately and have both pleaded guilty to market manipulation and conspiracy to commit wire fraud and to operate an unlicensed money transmitting business. Vy Pham, 32, of California, is also charged for conduct at a different cryptocurrency company but, as part of that guilty plea, admitted to certain conduct involving Saitama.

Saitama allegedly purported to create a series of products that could be used with its token and, at its peak, boasted a market value of $7.5 billion. Saitama’s leadership allegedly made a variety of false public statements, including that Saitama’s business plan had been reviewed by regulators, that its leadership was not selling the Saitama tokens they owned and that the Saitama token was coded in a way that prevented market manipulation. According to charging documents, in reality Saitama’s leadership was actively manipulating the market for the Saitama token and secretly selling their Saitama tokens for tens of millions in profits.

Saitama’s market manipulation campaign allegedly began in or about July 2021, when leadership coordinated a series of small purchases spread across multiple cryptocurrency wallets. These trades were coordinated on Telegram, where Armand allegedly explained that the goal was to “create an illusion of massive buys and new holders” to “incite ppl [people] to buy 

more…W[e] want list of small buys to look like it’s mor[e] buyers. That’s the idea.” Saitama’s leadership allegedly confirmed their purchases to one another, discussed how they were successfully getting others to purchase the Saitama cryptocurrency and exchanged “pump it” memes and GIFs:

Thereafter, the Saitama leadership allegedly paid several market makers to wash trade the Saitama cryptocurrency on cryptocurrency exchanges, including BitMart, LBank and XT.com. The market makers that Saitama paid allegedly included ZM Quant and Gotbit.

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Robo Inu Finance (Robo Inu) – Robo Inu was a cryptocurrency company and token that Vy Pham created after she left Saitama in 2021. Pham has been charged and agreed to plead guilty to conspiracy to commit market manipulation, to commit wire fraud and to operate an unlicensed money transmitting business. Pham founded and promoted Robo Inu from the United States. Like Saitama, Robo Inu allegedly purported to create a series of products that could be used with its cryptocurrency. Beginning in or about 2022, Robo Inu allegedly paid Gotbit to artificially inflate the trading volume of the Robo Inu token through wash trades on cryptocurrency exchanges such as Bitmart.

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Michael Thompson, VZZN – VZZN was a cryptocurrency company and token that Armand created after he left Saitama in 2023. Michael Thompson, 50, of Virginia, also worked at VZZN. As with Armand, Thompson is charged and pleaded guilty to conspiracy to commit market manipulation. VZZN allegedly purported to be a video streaming service that could be used with the VZZN token. While promoting that service, Armand and Thompson allegedly also made misleading public statements about VZZN and artificially inflated the trading volume of the VZZN token through wash trades.

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Bradley Beatty, Lillian Finance LLC (Lillian Finance) – Lillian Finance was a cryptocurrency company and token founded by Bradley Beatty, 48, of Florida. Beatty is charged in an indictment with wire fraud. Lillian Finance allegedly purported to use blockchain technology in the healthcare industry and to use a portion of proceeds generated from token sales for charitable purposes. Beatty allegedly made a series of false statements about Lillian Finance to attract investors, for example, that he was a defense contractor and that he had addressed Congress on the topic of cryptocurrency. Thereafter, it is alleged that Beatty generated hundreds of thousands of dollars in proceeds from retail sales of the Lillian Finance token and misappropriated a portion of Lillian Finance’s profits that were supposed to be used for charity.