The company implemented a large-scale scheme to manipulate the rates of digital assets

Santiment predicts a crypto market rally after the arrest of the GOTBIT market maker’s CEO

10.10.2024 - 10:30

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3 min

The material is not an investment recommendation and is published for informational purposes only.

What’s new? An expert of the analytical blockchain platform Santiment under the nickname Brianq has told how the arrest of the CEO of the market maker GOTBIT Aleksei Andriunin in the case of fictitious trading can affect the rates of cryptocurrencies. In his opinion, after the US authorities disclose a large-scale market manipulation scheme, a short and insignificant drop in prices will begin, leading to a bullish rebound.

Santiment article

What else is known? According to the analyst’s prediction, traders will soon be panicked by the news, which will lead to mass closing of positions and a “capitulation effect” that will pave the way for a bullish rebound. This effect implies that a significant event, either past or upcoming, such as the release of economic data, the actions of regulators and law enforcers, or news of a hack, is already reflected in current prices (priced-in).

Historically, moments of extreme panic often coincide with the market hitting bottom, Brianq notes. So, retail traders react emotionally and sell off their assets, allowing experienced traders and institutional investors to accumulate assets at lower prices.

As a result, the reactive pressure of retail sellers combined with the growth of buying activity on the part of other market participants may provoke a short-term rally. The analyst emphasizes that this will happen if retail traders abandon their positions for fear of further losses.

As for the news itself, the founder and CEO of GOTBIT, 26-year-old Russian Aleksei Andriunin, was detained in Portugal on October 9 at the request of the US authorities. The DOJ accused him of market manipulation, fraud, and money laundering.

It is reported that from 2018 to 2024, GOTBIT provided fictitious trading services (wash trading) to artificially inflate the trading volumes of various tokens to several companies, including in the United States.

Investors interested in supposedly promising and growing coins invested their funds, after which GOTBIT dumped these assets at an inflated value that it artificially created.

Simply put, the company was implementing a widespread fraudulent Pump&Dump scheme.

Charges in the market manipulation case are also brought against the companies and executives of ZM Quant, CLS Global, and MyTrade, which were involved in providing liquidity. In addition to Andriunin, GOTBIT senior executives Fedor Kedrov and Kavi Jalili have been detained. A total of 18 individuals and legal entities are accused in the case.

Separately from the DOJ, the US Securities and Exchange Commission (SEC) filed a civil lawsuit against GOTBIT, CLS, ZM Quant, Saitama, and Robo Inu for violating securities laws.

Notably, to investigate the case, the FBI created its own token on the Ethereum blockchain called The NexFundAI Token and registered a company of the same name. This allowed it to bring the suspected firms to “cooperate” and uncover their fraudulent schemes.

According to the legend, The NexFundAI Token was an innovative project aimed at combining blockchain technology and artificial intelligence. It was claimed that holders of the coins were provided with passive income, while transaction fees were channeled to support early-stage projects.

The Santiment analyst notes that the collapse of GOTBIT, with its manipulative market-making practices, could ultimately create a healthier and more transparent trading environment, increasing confidence in crypto markets.

“Of course, the broader crypto market is notoriously difficult to predict, and traders should be mindful of the underlying dynamics at play. If the market sees a sharp sell-off, it could create significant opportunities for those willing to go against the crowd’s emotions. When most traders are fearful, and sentiment metrics hit extreme lows, prices often experience a sharp reversal,” the expert concluded.

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