• Gotbit allegedly manipulated $WATER token prices, selling more tokens than they purchased, raising fraud concerns.
  • WaterCoin devs transferred 844.44M $WATER to new wallets, selling them for $2.35M in $SOL, fueling manipulation accusations.
  • The FBI created a fake token to catch Gotbit, ZM Quant, and CLS Global in a $25M crypto market manipulation probe.

The U.S. SEC, FBI, and DOJ have filed lawsuits against Gotbit and several other crypto firms, accusing them of fraud and market manipulation . Gotbit, a notable “market maker,” allegedly manipulated token prices, including $WATER, claiming to lower prices fairly. 

However, they sold far more tokens than they purchased, raising concerns about their motives. Recently, it was revealed that the WaterCoin development team transferred 844.44M $WATER to new wallets, which did not participate in the pre-sale. These wallets, in turn, sold the tokens for over $2.35 million in Solana ($SOL).

The US SEC, FBI, and DOJ sued #Gotbit and other crypto firms for alleged fraud and market manipulation. #Gotbit previously claimed that they sold $WATER to lower the price to a fair level.

However, #Gotbit sold significantly more tokens than purchased! https://t.co/qtYsQvX6OB pic.twitter.com/8OWV5qOnMi

— Lookonchain (@lookonchain) October 10, 2024

Gotbit and Others Face Serious Charges

In an extensive fraud investigation, fifteen people and three cryptocurrency businesses have been accused by federal authorities. To combat crime, the FBI for the first time oversaw the development of a new token.

Firms involved, including Gotbit, ZM Quant, and CLS Global, allegedly inflated token volumes to deceive investors. Consequently, more than $25 million worth of cryptocurrency has been seized . Several defendants have already been arrested, and some have agreed to plead guilty.

Gotbit’s CEO, Aleksei Andriunin, was arrested in Portugal, alongside two other employees charged for “wash trading” since 2018. Wash trading, which involves self-trading to falsely inflate token volume, is an old but effective manipulation strategy. 

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Moreover, other firms like ZM Quant and CLS Global were caught manipulating a token created by the FBI. By artificially boosting volume, they aimed to pump the token’s value before selling it off, leaving retail investors at a loss.

Further Arrests and Civil Suits

The investigation has expanded to other tokens, including Saitama and Robo Inu, both linked to Gotbit. Besides Gotbit, firms like Lillian Finance and VZZN also face fraud charges. Their founders, along with several individuals connected to Pham, have been charged with market manipulation. 

Civil suits filed by the U.S. SEC seek permanent injunctions and financial penalties against the accused. The crackdown reveals the depth of manipulation in the cryptocurrency . Authorities are determined to bring justice to those defrauded by these schemes.

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