According to February 26, Gotbit founder Aleksei Andriunin was handed over to the US to face charges related to market manipulation and conspiracy to wire fraud. statement by the Massachusetts Lawyer's Office.
Andrinin was arrested on October 8, 2024 by Portuguese authorities, where he lived. After his extradition, he appeared in federal court in Boston on February 25th and was ordered to be taken into custody at a future hearing.
On October 31, 2024, the Federal Ju judge in Boston was indicted Andrinin and Gottbit directors Fedor Kedorov and Kawi Jalili on charges of fraud and conspiracy to commit market manipulation and wire fraud.
Market operation
According to court documents, GOTBIT operates as a “market maker” in the crypto industry and provides market manipulation services between 2018 and 2024.
Andriunin is said to have created software to promote “Wash Trading.” This is a practice of artificially inflated trading volumes. This tactic helped secure a list of data aggregators such as CoinMarketCap and make inputs into a larger exchange into a project.
Investigators allege that Gotbit employees, including Jalili and Kedrov, sold these tactics to clients and used multiple accounts to disguise washing transactions from blockchain observers.
The scheme reportedly includes transactions worth millions of dollars, with GoTbit generating tens of millions of revenue from fraud. Authorities accused Andriunin of transferring some of these proceeds to his personal Binance account.
If convicted, Andriunin faces up to five years for prisons for up to 20 years for wire fraud and conspiracy to commit market manipulation and wire fraud. He could also be subject to fines up to 250,000 or twice the total profit or loss from crime, compensation or forfeiture.
Artificial transaction volume
The US Securities and Exchange Commission (SEC) filed fraud charges against GoTbit and its employee Fedor Kedrov on October 15, 2024.
The SEC claimed that the platform used the scheme to manipulate the market for “Robo Inu,” a cryptocurrency sold as security for retail investors.
According to the SEC complaint, Crypto Asset promoter Vy Pham hired Gotbit to generate artificial trading volume for Robo Inu. GoTbit is said to have adopted methods from the washing industry to generate fake market activity on its trading platform.
Investigators claim the company uses automated trading algorithms to produce artificial trading volumes of over $1 million each day.
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