Ten executives and employees from four cryptocurrency trading firms were charged Monday in federal court in Oakland in connection with alleged schemes to inflate digital token prices and trading activity through fraudulent “wash trading,” federal prosecutors said.
Three defendants — including two chief executive officers — were arrested in Singapore and appeared in federal court following their extradition to the United States, the U.S. Attorney’s Office for the Northern District of California said. Two others have already pleaded guilty and been sentenced.
Employees from the firms Gotbit, Vortex, Contrarian and Antier were charged in three separate federal indictments alleging they carried out “wash trading” schemes designed to create the false appearance of market activity and boost cryptocurrency prices before selling holdings at higher values, prosecutors alleged.
Authorities said the schemes caused losses to investors in the United States and elsewhere. Investigators have seized more than $1 million in cryptocurrency so far.
How authorities uncovered the plot
The charges stem from an undercover operation by the FBI and IRS, which targeted illegal trading practices in the cryptocurrency industry. As part of the probe, the FBI created several cryptocurrency tokens used during the investigation, authorities said.
Prosecutors said the defendants allegedly acted as illicit market makers by coordinating trades in which they served as both buyers and sellers — a tactic known as wash trading — to make tokens appear more actively traded than they were and attract investors.
Among those extradited to the U.S. and now in federal custody are Gleb Gora, chief executive officer of Vortex, and Manu Singh and Vasu Sharma of Contrarian, prosecutors said.
Earlier in the investigation, Antoine Tsao and Nemanja Popov, both affiliated with Gotbit, pleaded guilty in separate proceedings after being arrested at U.S. airports and were later sentenced in federal court in Oakland.
If convicted, the defendants face up to 20 years in prison and fines of up to $250,000 per violation, according to the U.S. Attorney’s Office.