SEC Cracking Down on Crypto Manipulators
A number of crypto fraudsters have been charged by the SEC this week in a crackdown on market manipulation.
The SEC (US Securities and Exchange Commission) has been very busy lately in the crypto sector with an ongoing lawsuit against Ripple and now a crackdown on 11 crypto schemers.
The commission announced yesterday that they were charging three companies and nine individuals with fraud. All of their targets are being charged for their crypto activity, namely in enticing customers to buy cryptocurrency under false pretenses. In these cases, the companies and individuals deceived their victims by making it look like there was an active market for the assets when there was not one.
The companies that have been charged were all involved in market manipulation as a service. They presented artificial data to their customers and sold digital assets as securities. All of the transactions were unregistered and therefore illegal. Some of the schemes were under parallel investigation by the Federal Bureau of Investigation. The companies involved are Gotbit, ZM Quant, and CLS Global. In all of these cases, the companies were convicted of fraudulent behavior and trying to sell assets as securities when they are not registered as such.
The SEC Speaks Out
SEC’s Deputy Director Sanjay Wadhwa said, “Retail investors are being victimized,” and that this is happening in the crypto space with digital assets. The targets are being promised incredible profits that the marketers cannot deliver on. They are not making the victims aware of the risks involved, and Wadhwa said that they should know that the odds are not in their favor.
The SEC says that the illegal activity was not just the work of company heads but by many of their employees who were manipulating markets through a practice known as self-trading. This acidity goes by the name wash trading as well and involves transactions that do not serve any kind of beneficial purpose but that create the appearance of massive activity when there is none. In many instances, the companies and individuals would use bots across multiple platforms to carry out quadrillions of transactions to boost the appearance of activity, deceiving the victims into thinking that a very active market is available.
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