Crypto News: 10 Execs Charged in $1M Trading Fraud Case

Key Insights

• Ten employees and executives of crypto market-makers were charged with trading fraud, with over $1 million recovered.
• Two of those charged have already pleaded guilty, and five were extradited from Singapore.
• US DOJ’s handling of crypto-related cases continues to raise concerns, especially as privacy developers remain vulnerable.

The US Department of Justice (DOJ) has charged ten executives and employees of crypto market-making firms with market manipulation. This is part of an international undercover operation by the  Federal Bureau of Investigation (FBI) and IRS Criminal Investigation (IRS-CI).

The ten individuals, all foreign nationals, have connections to four marker makers, including Gotbit, Vortex, Antier, and Contrarian.

DOJ Charges Defendants for Wash Trading and Pump and Dump and Pump and Dump

According to the DOJ press release, federal grand juries have already indicted the ten defendants in three separate indictments. They all face the same charges of wash trading and price manipulation, leading to losses for investors both within and outside the US.

So far, three Gotbit employees have been indicted. The Business development manager, Antoine Tsao, and account manager, Nemanja Popov, have both pleaded guilty and have been sentenced, while the sales manager, Ian Sofronov, remains at large.

Two Vortex executives, Gleb Gora, the CEO, and Sergei Ryzkov, the CFO, were also extradited from Singapore along with the firm’s business development manager, Michael Vogel.

Meanwhile, the CEO and CFO of Contratian, Manu Singh and Kushagra Srivasta, have also been indicted along with Vasu Sharma, a business development associate at the firm. Sabby Singh, a manager at the Contrarian partner firm Antier Solutions, was also indicted. Singh and Sharma were extradited from Singapore and are now in custody alongside Gora.

While an indictment does not automatically lead to a conviction, the defendants could face up to 20 years imprisonment for each charge, along with a fine of $250,000. Interestingly, the operation leading to the arrest of the employees and executives involved the FBI creating a token.

DOJ Faces Criticisms for Selective Crypto-Related Prosecution

Meanwhile, the recent indictment is part of broader efforts by the US DOJ to prosecute crypto-related crimes. In recent years, the DOJ has gone after several individuals for crypto fraud.

In January, a man was sentenced to three years in prison for wire fraud in an $8 million crypto investment scheme. This was followed by a 20-year prison term for the mastermind of a $73 million crypto investment scheme.

However, not all the legal actions have been welcomed. Some within the crypto community have criticized law enforcement for not going after the big players. Many noted that centralized exchanges and major market makers should also be investigated.

More importantly, there is growing concern about the DOJ’s treatment of developers working on privacy software. While the DOJ under President Donald Trump publicly committed not to prosecute such developers, its actions say otherwise.

The department has already secured convictions against the developers of Samourai wallets. It also recently filed an application for retrial of Tornado Cash developer Roman Storm on two charges for which he was initially acquitted.

This raised more concerns recently after a federal judge dismissed a lawsuit by developer Michael Lewellen against the DOJ. Lewellen had said he was afraid the DOJ would prosecute him for building privacy software. However, the Judge ruled that the defendant was not under a threat of prosecution, citing the DOJ’s commitment.

Stakeholders believe this leaves such developers vulnerable, as there is no legal clarity on how they will be treated.

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