Investors were deceived by artificial trading volume and price manipulation.
The Securities and Exchange Commission (SEC) filed fraud charges against three companies and nine individuals for engaging in schemes designed to manipulate the markets for various crypto assets sold as securities to retail investors. The SEC alleged that the involved parties created the illusion of active trading to deceive investors into purchasing these assets. The promoters hired market makers to carry out this market manipulation by artificially inflating trading volumes and prices of the crypto assets. This included using tactics such as “wash trading” to generate billions of dollars in artificial trading volume each day.
SEC’s Division of Enforcement Deputy Director Sanjay Wadhwaof said, “Retail investors are being victimized by fraudulent activity by institutional actors in the markets for crypto assets… investors should be mindful that the deck may be stacked against them.”
The SEC’s complaints highlighted the collaboration between the SEC and the Federal Bureau of Investigation (FBI), revealing that a crypto asset created as part of an FBI operation was also manipulated by market makers.
As the Lord Leads, Pray with Us…
- For discernment for Deputy Director Wadhwaof as he oversees the SEC’s Division of Enforcement.
- For FBI officials as they seek to prevent cryptocurrency fraud.
Sources: Reuters
