• The SEC claims firms used fake trades to inflate crypto asset values and trick investors.  
  • Nine individuals are accused of working with firms to create a false active market.  
  • The SEC and FBI are investigating similar schemes to protect the growing crypto market.

The U.S. Securities and Exchange Commission  has charged three companies and nine individuals for manipulating the cryptocurrency market. The SEC claims these companies inflated the trading volume of certain crypto assets and made the market seem more active. This tactic misled investors and caused significant financial harm. The individuals involved allegedly offered unregistered assets, violating U.S. securities laws. They created a fake market to convince retail investors to buy these assets.

SEC Enforcement: #SEC Charges Three So-Called Market Makers and Nine Individuals in Crackdown on Manipulation of Crypto Assets Offered and Sold as Securities

The SEC today announced fraud charges against three companies purporting to be market makers and nine individuals for… pic.twitter.com/j4ASGqlcDx

— MartyParty (@martypartymusic) October 9, 2024

The individuals charged include Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, Nam Tran, and Vy Pham. They are accused of working with firms like ZM Quant and Gobit to make the market look more active than it was. This tricked investors into thinking the assets were in high demand.

Inflating Trading Volume

ZM Quant and CLS Global were major players in the scheme, according to the SEC. These companies allegedly made fake trades to inflate the value of several crypto assets. This made the market appear larger and drew in more investors. By doing so, they violated federal securities laws by selling assets that were not registered.

This fake trading allowed them to manipulate the prices of the assets and earn profits. Many investors ended up buying overvalued or worthless assets because they believed the market was stronger than it was. The SEC says these activities misled the public and caused harm to many investors who trusted the fake data they were seeing.

Key People Behind the Plan

The SEC also named Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, Nam Tran, and Vy Pham as key figures in the scheme. These individuals hired market-making firms like ZM Quant and Gobit to inflate volumes and deceive investors. They presented the assets as highly demanded and misled people into buying them.

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The SEC claims these actions helped sell unregistered securities, which violated U.S. law. Investors were left with assets that were worth much less than what they had paid. The scheme caused a lot of damage to those who trusted the data.

Ongoing Investigation

The SEC is conducting a broader investigation into the crypto market. It is working with the FBI to uncover similar fraudulent schemes. The SEC wants to make sure that investors are protected as the cryptocurrency industry grows. It is focused on ensuring that the market remains fair and transparent for everyone.

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