A so-called “market maker” in the crypto sector and its founder have been sentenced on criminal fraud charges for alleged market manipulation.
The firm, Gotbit Consulting LLC, allegedly provided market manipulation as a service to various crypto trading platforms to create artificial trading volume.
U.S. authorities alleged that between 2018 and 2024, the firm charged monthly fees to engage in algorithmic wash trading to artificially boost the volume and trading prices of tokens on behalf of various crypto clients.
“Gotbit does this for the express purpose of misleading investors to believe that there is a robust market for these crypto assets, when there is often little or no genuine interest in them,” the U.S. Securities and Exchange Commission (SEC) alleged in a filing against Gotbit, which also charged the firm with violating securities laws.
To resolve the criminal charges in federal court in Boston, the firm was ordered to forfeit US$23 million in seized crypto and was sentenced to five years of probation, during which it must cease operations.
The founder and CEO of Gotbit, Aleksei Andriunin, who pleaded guilty to wire fraud and conspiracy charges, was sentenced to eight months in prison, followed by a year of supervised release.
Gotbit is the third firm engaged in “market making” for the crypto sector to resolve criminal charges related to alleged wash trading in the industry.
The SEC’s parallel civil complaint seeks permanent injunctions, conduct-based injunctions, disgorgement of allegedly ill-gotten gains plus interest, and civil penalties against Gotbit and an employee of the firm, Fedor Kedrov. Those allegations have not been proven.