US Charges 14 Individuals And Four Crypto Companies In Major ‘Sham Trading’ Scandal

On Wednesday, US prosecutors charged four crypto companies and 14 individuals in what is hailed as the first criminal prosecution targeting financial services firms for market manipulation and sham trading activities within the crypto sector. 

According to a court filing by the US District Court of the District of Boston Massachusetts, one of the companies charged is crypto trading firm ZM Quant, which is registered in the British Virgin Islands.

Prosecutors allege that from approximately 2022 to 2024, ZM Quant conspired to manipulate the trading volume and prices of various undisclosed cryptocurrencies. 

The scheme allegedly allowed the company to profit by receiving payments from crypto companies and selling the manipulated cryptocurrencies at what prosecutors said were “inflated prices”.

The court filings detail the objectives of the conspiracy, suggesting that the primary intent was to engage in market manipulation and wire fraud. Prosecutors allege that the conspirators aimed to enrich themselves at the expense of market integrity and investor trust.

In addition to ZM Quant, the indictment includes other firms—Gotbit, CLS Global, and MyTrade—along with their executives and employees. 

This coordinated enforcement action also involved international arrests. Notably, five individuals connected to the case have already entered guilty pleas or agreed to plead guilty, indicating a potential willingness to cooperate with authorities.

The charges of these companies also revolve around serious allegations of deceptive trading practices, often referred to as “sham trading,” which is designed to create a false impression of market activity, misleading investors and artificially manipulating prices.

Featured image from DALL-E, chart from TradingView.com