As a seasoned analyst with over a decade of experience in the financial industry, I find it disheartening but not entirely surprising that wash trading and fraud continue to tarnish the cryptocurrency market. The U.S. Department of Justice’s recent charges against several entities only underscore the need for increased regulation and transparency in this space.

Over the past week, I’ve learned that I was among many crypto investors who fell victim to fraudulent activities by some market makers. These entities, numbering over a dozen individuals and firms, have been indicted by the Department of Justice for engaging in wash trading with funds, essentially defrauding us investors.

PS: I’ll be at Flyover Fintech in Lincoln, Nebraska on Monday.

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‘Not entirely ethical’

The narrative

Last week, the U.S. Department of Justice accused several individuals and entities such as Gotbit, CLS Global, MyTrade, and ZM Quant, claiming they engaged in wash trading crypto, and that their administrators, along with certain token promoters, misled investors by defrauding them.

Why it matters

Wash trading isn’t exactly a massive secret in this industry – as I’ll get to further down – but it’s still a market signal that can portend poorly.

Breaking it down

In 2019, I confided in Anna Baydakova, then a reporter for CoinDesk, that my partner and I established a company with the aim of artificially inflating the trading volume of lesser-known cryptocurrencies. The intention behind this was to make these tokens seem active enough to secure a listing on CoinMarketCap and garner interest from larger companies.

At the time, Andryunin said, “The business is not entirely ethical.”

After five years, it seems that both sides concur. Andryunin was apprehended in Portugal for the purpose of being transferred to the United States.

You can read Anna’s 2019 report at this link.

Another noteworthy point: The FBI had developed its own counterfeit token called NexFundAI, complete with an authentic contract traceable on the blockchain. The website, adorned prominently with a large “FBI” emblem, appeared strikingly genuine – much like numerous AI-oriented cryptocurrencies that make broad claims but promise astronomical returns.

Stories you may have missed

India’s Crypto Discussion Paper on Hold Due to Other Priorities: India was supposed to publish a policy discussion paper on crypto last month, but didn’t. Amitoj Singh reports this is due to the government deciding crypto was not a priority for it.
FTX’s Salame Hoped Dog Bite Would Delay Prison, But Tucker Carlson Derailed Effort: Ryan Salame went on a press tour (and updated his LinkedIn) ahead of reporting to prison last week, while also asking a federal judge to delay his reporting date to December for medical reasons. The Department of Justice said he looked fine during his Tucker Carlson appearance, a comment the judge quoted in denying Salame’s request.
Kamala Harris Speech Offers No Further Details on Crypto ‘Regulatory Framework’: Vice President Kamala Harris’s campaign published a policy document saying she would support a crypto regulatory framework, but did not elaborate during public remarks later in the day.
Bitnomial Exchange Sues U.S. SEC, Alleging Regulatory Overreach: What’s really interesting about Bitnomial suing the U.S. Securities and Exchange Commission here is the suggestion that the SEC still wants to call XRP a security, something Ripple executives have denied could happen.
Crypto.com Sues SEC, Chair Gary Gensler After Receiving Wells Notice: Headline basically shares the relevant information here.

This week

It's Possible You Shouldn't Tell Journalists About Your Wash Trading Biz

Tuesday

21:00 UTC (2:00 p.m. PDT) There was a brief hearing in SEC v. Payward (Kraken) but it seems to have been a short hearing and the trial appears to be scheduled for August 2026.

Elsewhere:

(The Wall Street Journal) Fairshake’s ads continue to not mention crypto despite the industry super PAC’s focus. “Crypto ‘is not an issue that moves the vast majority of voters,’” Ohio GOP Senate nominee Bernie Moreno told the Journal. Other reports by Politico and The Washington Post detail the same trend, and of course CoinDesk’s own Jesse Hamilton dug into Fairshake’s secretive practices this past June.
(The Washington Post) Climate change is becoming increasingly expensive by worsening droughts and helping lead to stronger hurricanes. Also worth reading: This piece on Florida’s insurance market.
(The New York Times) Meteorologists are getting death threats now, which is pretty insane. An individual was even arrested for threatening Federal Emergency Management Agency employees.

As a crypto enthusiast, if you have any suggestions for topics you’d like me to cover next week, or simply want to share your feedback, don’t hesitate to reach out! You can drop me an email at nik@coindesk.com or find me on Twitter @nikhileshde. Let’s continue the conversation about the world of digital currencies together!

You can also join the group conversation on Telegram.

See ya’ll next week!

2024-10-19 02:43

It’s Possible You Shouldn’t Tell Journalists About Your Wash Trading Biz