SEC Accuses Several Firms and Persons of Significant Crypto Asset FraudÂ
Published on October 12, 2024
- The U.S. Securities and Exchange Commission charged several individuals and companies with cryptocurrency fraud.
- Retail investors were tricked into acquiring cryptocurrency via deceptive lures.
- The defendants created the appearance of active trading via collaborations with ZM Quant, Gotbit, and CLS Global.
The U.S. Securities and Exchange Commission (SEC) announced significant fraud charges against three companies and nine individuals accused of manipulating crypto markets. The defendants allegedly collaborated with a few entities to create a false appearance of active trading.
The SEC revealed that the involved promoters and companies engaged in "market manipulation as a service," using self-trading tactics to simulate genuine market activity. This scheme misled retail investors into purchasing crypto assets through artificially inflated trading volumes and prices.
Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, Nam Tran, and Vy Pham are among the individuals who allegedly collaborated with entities like ZM Quant, Gotbit, and CLS Global.
The SEC's charges focus on deception, as these entities misrepresented the true market demand for certain crypto assets. The fraudulent activities included using algorithms and trading bots to generate fake transactions, sometimes resulting in billions of dollars in daily artificial trading volume.
Retail investors were lured by the false promise of profitable investments, unaware of the manipulated nature of the trading activity. The SEC emphasizes the risk posed to investors, underscoring the need for vigilance when engaging with crypto markets.
The SEC has filed complaints in the United States District Court for the District of Massachusetts, charging defendants – including promoters Russell Armand, Maxwell Hernandez, and Vy Pham – with violating antifraud and market manipulation provisions of U.S. securities laws.Â
Additionally, some defendants face accusations of violating registration requirements. Three defendants have agreed to settle the charges pending court approval. The settlement entails permanent injunctions against future violations, conduct-based prohibitions, and restrictions on their ability to serve as officers or directors of public companies.
The SEC seeks various forms of relief, including permanent injunctions to prevent further violations of securities laws by the defendants and conduct-based injunctions aimed at prohibiting specific behaviors related to market manipulation.
Others include imposing civil penalties to deter future violations and barring certain defendants from serving in leadership roles within SEC-regulated companies.
In recent news, a large-scale cryptocurrency-stealing malware campaign compromised over 28,000 users in Russia, Turkey, Ukraine, and other Eurasian countries, deploying a sophisticated attack that promotes trojans as legitimate software via YouTube promotions and fraudulent GitHub repositories.
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