Washington, D.C., October 9, 2024 — The U.S. Securities and Exchange Commission (SEC) has charged three companies claiming to be market makers and nine individuals with fraud for their involvement in schemes to manipulate crypto-asset markets offered as securities to retail investors. The schemes allegedly aimed to create a false impression of active trading to attract investors.
According to the SEC’s complaints, crypto-asset promoters — Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, Nam Tran, and Wai Pham — hired companies ZM Quant and Gotbit to provide a market manipulation service, which included creating artificial trading volume and manipulating the prices of crypto-assets that the promoters sold to retail investors. The SEC also stated that ZM Quant and a third so-called market-making company, CLS Global, used similar schemes to manipulate markets.
As a result of the actions of these companies and individuals, trading bots and algorithms were used to generate billions of transactions daily, creating the illusion of high activity on cryptocurrency platforms.