US Department of Justice has charged Gotbit’s top managers with fraud and market manipulation

What’s new? The US Department of Justice has charged the founder of market maker Gotbit, 26-year-old Russian Aleksei Andriunin, with conspiracy to commit fraud and market manipulation. The new opinion also charges the company itself and two of its top managers, Fedor Kedrov and Qawi Jalili.

Press release

What else is known? The prosecution alleges that Gotbit, a well-known market maker in the cryptocurrency industry, provided market manipulation services from 2018 to 2024 by artificially inflating the actual token trading volumes for several crypto companies, including those based in the United States.

Andriunin, as founder and CEO, self-reported in a 2019 interview how he developed fictitious trading code to inflate trading volume for listings on leading crypto market data aggregator CoinMarketCap (CMC) and major exchanges.

According to the case file, Andriunin kept records of market manipulation: spreadsheets compared Gotbit’s real and inflated trading volumes.

Andriunin, along with Kedrov, director of market making, and Jalili, director of sales, promoted these tactics to potential customers, explaining that Gotbit used multiple accounts to make it difficult to detect fictitious trading on transparent public blockchains.

According to the prosecution, Gotbit made fictitious trades worth millions of dollars on behalf of customers and received tens of millions of dollars for those services. Andriunin transferred millions of dollars of Gotbit’s proceeds to his personal account on Binance, the largest crypto exchange.

Gotbit’s clients included cryptocurrencies Saitama and Robo Inu. The developer of those coins, Vietnamese national Vy Pham, known by the nickname msvy_crypto, was also charged with fraud in a separate civil suit by the US Securities and Exchange Commission (SEC). Pham has agreed to settle the commission’s claims by returning the illegal proceeds and paying a fine.

Gotbit executives were detained in early October in Portugal at the request of US authorities. A total of 18 individuals and entities are defendants in the case, including liquidity providers ZM Quant, CLS Global, and MyTrade.

The story is notable because in order to gather evidence of Gotbit’s fraud, FBI agents created their own token and set up a shell company, The NexFundAI, through which they interacted with the market maker as a client.

As for the possible punishment for Andriunin, several counts, in addition to hundreds of thousands of dollars in fines, could result in a maximum sentence of 25 years in prison.