The U.S. has charged four companies in a big effort to stop crypto fraud. This action follows a report that revealed Americans lost over $5.6 billion in scams.
The U.S. Department of Justice (DOJ) has taken strong action against cryptocurrency fraud by charging four companies and 14 people for changing the crypto market. This happened after the FBI reported that Americans lost a big $5.6 billion to cryptocurrency fraud schemes in 2023.
Overview of US Companies Charged in Crypto Fraud
In one of the first criminal cases about cheating in the cryptocurrency industry, four companies—Gotbit, ZM Quant, CLS Global, and MyTrade—have been charged with dishonest actions meant to trick investors and raise token prices.
These companies and 14 people are accused of creating fake trading volumes. They manipulated crypto markets to earn money for themselves. The charges were announced after a long investigation by the U.S. Department of Justice in Boston. This investigation led to arrests in different countries.
Some of the people involved lived in the United States, while others were from the United Kingdom and Hong Kong. According to court documents, five people have already said they are guilty or agreed to say they are guilty.
Focus on Gotbit: A Repeat Offender
One of the main companies involved in this case, Gotbit, has been connected to many dishonest activities before, including “rug pull” scams. In these scams, the creators of a crypto project vanish with the investors’ money, leaving them with nothing. Gotbit’s role in this latest fraud case isn’t surprising because the company has a long history of manipulating the market to create fake trading volumes.
Gotbit has previously admitted to using questionable business practices, which has damaged its reputation even more. This company, along with others like ZM Quant, CLS Global, and MyTrade, took advantage of the decentralized nature of cryptocurrency markets. This made it hard for regulators to spot fraud until significant harm had already occurred.
Americans Lost $5.6 Billion to Crypto Fraud in 2023
In 2023 a report from the FBI revealed that Americans lost more than $5.6 billion to cryptocurrency scams. This marks a 45% rise compared to the previous year. The report highlights that investment scams were the most common type of fraud, resulting in nearly $4 billion in losses.
These scams caused nearly $4 billion in losses. These scams often trick victims through social media, dating apps, or fake investment websites.
The FBI got almost 70,000 complaints in 2023 from people who were victims of financial fraud involving bitcoin, ether, and other cryptocurrencies. The biggest type of fraud was investment fraud which caused losses of about $3.96 billion.
How Scammers Operate Crypto Fraud?
Many crypto fraud schemes use tricks to earn people’s trust. Scammers often reach out to individuals on social media or dating apps and act like friends. Once they gain the victim’s trust they persuade them to invest in cryptocurrencies. Victims are usually sent to fake websites or apps that look real at first.
Scammers often contact people on social media or dating apps and pretend to be friends. Once they gain the victim’s trust they encourage them to invest in cryptocurrencies. The victims are usually directed to fake websites or apps that seem real.
To add a layer of credibility scammers may allow victims to withdraw small sums of money early on giving them a false sense of security before ultimately stealing the rest of their investments.
The FBI also said that after losing their money victims are sometimes targeted again by fake recovery services. These services claim they can help get back the lost money. However, these recovery services are often scams too, causing even more losses for victims who are already in financial trouble.
ZM Quant: Manipulative Tactics Exposed
ZM Quant, another company facing charges, said it offered market-making services. However, these services were tricks like wash trading, where fake trading volumes are created to make token prices look higher.
The company is accused of misleading investors by creating fake price movements, which made people invest based on false information.
The case against ZM Quant is important because it shows how crypto companies can manipulate the market, which has fewer rules than regular financial systems. This legal action warns other companies in the crypto industry that they will face consequences if they engage in fraudulent practices.
The DOJ Stance on Crypto Fraud
The DOJ and FBI have stated that cryptocurrency companies will now be watched closely just like regular financial institutions. This case is only the start of a bigger effort to stop illegal activities in the crypto market.
The global and decentralized nature of cryptocurrency, along with fast and irreversible transactions, makes it an easy target for scammers. However, as this case shows, the U.S. government is serious about holding companies responsible for fraud, even though it can be hard to catch the criminals.
Conclusion:
The charges against Gotbit, ZM Quant, CLS Global, and MyTrade are an important step in the fight against crypto fraud. As more Americans fall victim to cryptocurrency scams it is clear that we need stronger rules and better enforcement to protect investors from these dishonest schemes.
The FBI’s report on the $5.6 billion lost to crypto fraud in 2023 is a stark reminder that, despite the potential of digital currencies, the industry remains a high-risk environment for uninformed or unsuspecting investors.
This recent crackdown on US companies involved in crypto fraud sends a strong message: no one is above the law, and those who manipulate markets and deceive investors will be held accountable.
For more updates on cryptocurrency scams and how to secure crypto, follow CoinMozo on X.
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