The US SEC is going after three fraudulent market makers and some of their employees.
The US Securities and Exchange Commission (SEC) has brought enforcement action against three companies masquerading as market makers and nine individuals associated with the firms. These firms indulged in fake trading activity, also referred to as wash trading, to inflate asset activity and prices to mislead investors and secure their money.
Their illegal conduct brought irreparable financial harm to the retail investors, according to the agency. Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, Nam Tran, and Vy Pham, promoting the investment opportunities, hired ZM Quant and Gotbit for “market-manipulation-as-a-service.” Together, the individuals, their accomplices, and the companies conjured up trading activity that never occurred and manipulated markets to pull the wool over investors’ eyes.
Not the First of Manipulation in the Previous Days
ZM Quant, offering this illicit service, is not found indulging in it for the first time. Just a few days ago, news of it being busted in a Federal Bureau of Investigation (FBI) sting made headway. Alongside another fraudulent firm, CSL Global, ZM Quant conducted wash trading to profit off of a token that the FBI created to identify perpetrators. With a backdoor programmed into the token’s contracts, the Bureau could track the manipulation activity to CSL Global and ZM Quant.
“Today’s enforcement actions demonstrate, once more, that retail investors are being victimized by fraudulent activity by institutional actors in the markets for crypto assets,” stated Sanjay Wadhwa, the SEC’s Deputy Director for its Division of Enforcement. “With purported promoters and self-anointed market makers teaming up to target the investing public with false promises of profits in the crypto markets, investors should be mindful that the deck may be stacked against them.”
Beyond the names mentioned prior, the SEC said Baijun Ou, Ruiqi Lau, Fedor Kedrov, and Andrey Zhorzhes, employees at the three fraudulent firms, undertook market manipulation on behalf of promoters. They took to wash trading assets on well-known exchanges and used algorithms to execute “quadrillions of transactions and billions of dollars of artificial trading volume each day.”
Jorge G. Tenreiro, Acting Chief of the Division of Enforcement’s Crypto Asset and Cyber Unit (CACU), said, “The wrongdoers behind these schemes are profiting handsomely at the expense of investors that have been deceptively lured into these markets and lost their hard-earned savings.”
Some of the defendants have agreed to plea deals and settlements—the US District Court for Massachusetts is yet to approve them. The SEC has recommended the court offer the perpetrators permanent injunctions, disgorgement of gains, civil penalties, and officer and director bans for some defendants.
