Summary: DOJ uncovered market manipulation schemes involving crypto, pump-and-dump, and wash trading.

From Nasdaq

October 31, 2024 9:15 AM:

Market Manipulation as a Service was uncovered by the United States DOJ, spanning multiple countries. Wash-trading and pump-and-dump schemes were used, leading to the launch of Operation Token Mirrors. $25 million in crypto was seized and trading bots deactivated. Charges revealed tools for manipulating markets, with founders pleading guilty to conspiracy.

One case involved a company promoting a “volume support” tool for wash trades. Another case detailed market making on Uniswap using multiple wallets to boost trading volumes. The company offered marketing support and frequently changed wallets to avoid detection. A service agreement was sent out and a blockchain test environment was set up.

These charges highlight the evolution of financial crime, combining technology, third-party contractors, training, delivery services, and risk mitigation. The FBI’s investigation even involved creating their own cryptocurrency. The manipulative tactics may remain the same, but there is constant innovation in the ways these schemes are carried out. Fines & Enforcement Actions: The SEC, FBI, and DOJ charged 18 individuals and entities for market manipulation and fraud in the cryptocurrency industry, seizing over $25 million in cryptocurrency. The CNMC fined Neuro Energía y Gestión €1,081,502 for manipulating the Spanish electricity market, violating REMIT Regulation. The FBI arrested an Alabama man for hacking the SEC’s social media account to falsely announce bitcoin ETF approval.

Regulatory Updates: The SEC Division of Examinations released its 2025 examination priorities focusing on fiduciary duty, cybersecurity, and artificial intelligence. The Australian Prudential Regulation Authority published its annual report for 2023-2024. IOSCO released a final report on investor education on crypto-assets, while ESMA published a report on EU carbon markets, showing price declines in the EU ETS.

Fines & Enforcement Actions: The SEC charged Cumberland DRW LLC with operating as an unregistered dealer in over $2 billion of crypto assets, and Rimar Capital Entities for deceptive AI trading claims. The SEC also charged Minerco Inc. for a pump-and-dump scheme defrauding investors of $8 million. The CFTC settled charges against Tradition SEF LLC for system safeguard deficiencies.

Fines & Enforcement Actions: The FCA charged two individuals with conspiracy to deal in stocks with inside information, resulting in a profit of £110,000. The Hong Kong SFC arrested a member of a ramp-and-dump scheme for securities fraud. Dubai’s VARA issued cease-and-desist orders and fines to seven unlicensed entities. The SEC charged individuals for fraudulent activities involving investments in private companies. A recent investigation revealed a growing trend of companies hiring online mercenaries to manipulate market sentiment. These mercenaries use fake social media accounts and bots to spread misinformation and influence stock prices. This unethical practice is becoming more prevalent in the digital age, posing challenges for regulators.

Read more at Nasdaq.: Regulatory Roundup: Market Manipulation for Hire