- Authorities created fake cryptos to go undercover and record the illegal activity.
- Some of the guilty parties include firms such as Gotbit, Vortex, Antier, and Contrarian.
- Prosecutors and investigators say that wash trading is now systemic rather than isolated.
U.S. authorities have charged 10 individuals linked to multiple market-making firms in a sweeping crackdown on crypto wash trading. The case follows a years-long undercover investigation by the FBI and IRS, where agents created fake cryptocurrencies to expose manipulation tactics used across the industry.
FBI Undercover Operation Used Fake Tokens
According to prosecutors, investigators launched a covert operation by creating tokens designed to attract market-making firms. The goal was to record how companies allegedly offered services to artificially inflate trading volume and token prices.
Authorities said the accused firms coordinated trades across multiple wallets to create the illusion of real demand. These actions allegedly included fake volume generation, price manipulation, and pump-and-dump schemes.
Meanwhile, prosecutors noted that the activity misled investors about liquidity and market interest.
Firms named in the case include Gotbit, Vortex, Antier, and Contrarian, among others.
Charges and Penalties Could Reach 20 Years
Some defendants have already pleaded guilty. Gotbit founder Aleksei Andriunin agreed to serve no more than 24 months in prison after forfeiting $23 million. Other accused individuals could face up to 20 years in prison, highlighting the seriousness of the charges.
Investigators said the probe revealed that wash trading may be far more widespread than previously believed.
What is Wash Trading and Why It Matters
Wash trading involves buying and selling the same asset between accounts controlled by the same entity to create fake market activity. This can inflate volume, push token prices higher, and help projects appear more liquid than they actually are.
Authorities say the practice is particularly common in crypto due to global exchanges, uneven regulation, and strong reliance on liquidity metrics. Earlier investigations also found some firms offering manipulation services using automated algorithms.
The undercover sting suggests that wash trading is not isolated but systemic. Regulators now warn that a portion of crypto trading volume, especially among smaller tokens, may be artificially inflated.
Related: FBI Warns Tron Users of Fake ‘FBI Token’ Airdrop Scam
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Source: https://coinedition.com/fbi-sting-targets-crypto-wash-trading-10-charged-in-major-crackdown/
