The FBI just took down Aleksei Andriunin, who manipulated the crypto market for years using wash trading to artificially inflate token prices, duping investors and reaping millions in profits.
On October 9, the U.S. Attorney’s Office for the District of Massachusetts unveiled charges against 14 individuals and four companies involved in “widespread fraud and manipulation in the cryptocurrency markets.”
Authorities confiscated over $25 million in digital assets and dismantled several trading bots that were instrumental in carrying out the wash trading of various tokens. Additionally, approximately 60 tokens linked to the fraudulent activities were deactivated.
But how did we get here?
Why should we care?
And most importantly, why is this case going to shape the future of crypto regulation?
We’ll make this beginner-friendly. Pinky swear.
In the fast-paced, ever-evolving world of cryptocurrency, fortunes can be made and lost in the blink of an eye. For the lucky few, the promise of decentralized finance has delivered life-changing gains. But for many, it has been a turbulent ride through speculative bubbles, meme coin hype, and crushing crashes. Behind the scenes, some masterminds orchestrate the chaos for their own profit, spinning illusions of wealth and opportunity where little actually exists.
One of the most notorious figures to emerge from this unregulated market is Aleksei Andriunin (also known as Alexey Andryunin), the founder of Gotbit Consulting. From 2017 to 2024, Andriunin led one of the largest cryptocurrency market manipulation operations in history, artificially inflating the prices and trading volumes of hundreds of tokens.
The eventual collapse of this empire exposed the vulnerabilities in the cryptocurrency market, leading to massive losses for countless retail investors and prompting regulators worldwide to take action.
The Role of Market Makers in Cryptocurrency
Before going deeper into the details of Gotbit’s fraudulent activities, it’s essential to understand the role of market makers in cryptocurrency. Market makers are intermediaries that provide liquidity in financial markets by buying and selling assets, helping to ensure that trades can occur without extreme price fluctuations.
In traditional financial markets, market makers play a vital role in stabilizing prices and improving market efficiency. Their work is transparent, regulated, and closely monitored by governing bodies.
In the cryptocurrency world, however, the role of market makers is less defined. While many crypto projects legitimately hire market makers to improve liquidity, some companies—like Gotbit—use this role to manipulate markets.
By artificially inflating trading volumes and prices through tactics like wash trading (read more on it below), market makers can deceive investors into thinking a token is more popular and valuable than it actually is. In this unregulated environment, manipulation can easily go unnoticed, and Gotbit seized this opportunity to become a dominant player in market fraud.
The Birth of Gotbit: Building a Reputation for Fraud
Aleksei Andriunin founded Gotbit Consulting in 2017, positioning the company as a market maker specializing in providing liquidity to small and emerging cryptocurrency projects. Many new crypto tokens struggled to gain traction in a market saturated with thousands of competitors. For these projects, visibility on exchanges and ranking websites like CoinMarketCap was crucial to attracting investors.
Gotbit’s services seemed to offer a lifeline by boosting trading activity and creating the appearance of demand.
Initially, Gotbit presented itself as a legitimate business. Andriunin and his team marketed their services as essential for new tokens to succeed in a crowded market. However, behind the polished image, Gotbit was using fraudulent techniques to artificially inflate trading volumes and manipulate token prices.
The company’s business model was built on wash trading. In traditional financial markets, wash trading is illegal because it misleads investors about the true value of an asset. But in the unregulated world of cryptocurrency, it became Gotbit’s secret weapon.
Wash Trading: Gotbit’s Primary Tool for Market Manipulation
Wash trading is a market manipulation technique that involves creating artificial trading activity by buying and selling the same asset back and forth between accounts controlled by the same entity. This creates the illusion of liquidity and demand, tricking investors into believing a token is popular and in high demand.
Wash trading is strictly prohibited, as it can distort prices and mislead investors. However, in the cryptocurrency space—where regulations are minimal or nonexistent—wash trading became rampant.
At the core of Gotbit’s operation was a sophisticated network of trading bots designed to execute wash trades at high frequencies. These bots would engage in thousands of trades within minutes, creating the appearance of liquidity without any real buyers or sellers. By inflating the trading volume of a token, Gotbit made it appear more valuable than it was, attracting real investors who were unaware that the activity was fake.
From 2017 to 2024, Gotbit inflated the trading volumes of hundreds of tokens across multiple exchanges, including major platforms like Binance, BitMart, and XT.com. In some cases, the fake trading volume was 16 times higher than the natural market volume, creating a completely false sense of organic growth and demand.
By the time the manipulation was discovered, many investors had already lost significant amounts of money.
Crypto’s Volatile Market: Fertile Ground for Fraud
The cryptocurrency market has long been described as the "Wild West" of finance. With minimal regulation and oversight, the market became a playground for speculative excess, scams, and fraud. Born from the 2008 financial crisis and driven by distrust in traditional financial systems, cryptocurrencies promised an entirely new way to transact—one that was decentralized, borderless, and free from the control of central authorities.
Early adopters hailed Bitcoin, Ethereum and other digital assets as the future of money, and by the early 2020s, the market had exploded into the mainstream.
However, the very features that made cryptocurrencies attractive—decentralization, anonymity, and lack of oversight—also created an ideal environment for market manipulation. Prices could soar by thousands of percentage points in a matter of hours, driven by hype and speculation rather than intrinsic value.
For seasoned traders, this volatility was part of the thrill.
But for retail investors, it was often a game of chance, and for fraudsters like Andriunin, it was the perfect hunting ground.
The extreme price swings and speculative nature of cryptocurrencies made them ripe for manipulation. Tokens could be pumped to unsustainable heights, only to crash soon after, leaving investors holding worthless assets. Gotbit’s wash trading tactics capitalized on this volatility, inflating prices and volumes to attract unsuspecting investors who believed they were riding the wave of the next big thing.
The Mechanics of Gotbit’s Fraud: How the Scheme Worked
Gotbit’s fraud was successful not only because of the unregulated nature of the crypto market but also because of the sophisticated systems Andriunin and his team developed to avoid detection. The company relied on trading bots that executed trades at lightning speed, creating the appearance of organic market activity. These bots operated across hundreds of wallets, allowing Gotbit to buy and sell tokens between its own accounts without raising suspicion.
The sheer volume of trades conducted by these bots made it difficult for exchanges to detect the manipulation in real-time. Additionally, because cryptocurrency transactions are recorded on decentralized blockchains, tracking the source of the trades was challenging for regulators.
Together, these firms created a vast network of manipulation that stretched across multiple continents and affected hundreds of tokens. The decentralized nature of the cryptocurrency market made it difficult for regulators to track the activity, and exchanges were often slow to detect the fraud.
Gotbit’s trading bots were designed to mimic human behavior, executing trades at random intervals and in varying amounts, making it harder for automated surveillance systems to flag the activity as suspicious.
The company’s clients would approach Gotbit with a simple request: inflate the trading volume of their token to attract attention. Gotbit would then set its wash trading bots in motion, artificially inflating the token’s volume and pushing it up the rankings on different platforms. As the token appeared to gain traction, real investors would jump in, driving the price higher.
Once the token’s value had been sufficiently inflated, Gotbit’s clients would sell their holdings at the peak, profiting from the manipulation while leaving real investors with worthless tokens.
Robo Inu: One of Gotbit’s Most Notorious Manipulations
One of the most high-profile tokens manipulated by Gotbit was Robo Inu, a meme coin created in 2022 by Vy Pham. The project, inspired by the success of tokens like Dogecoin and Shiba Inu, entered the market during the height of the meme coin craze. However, unlike Dogecoin, which had gained organic popularity through community-driven support, Robo Inu’s success was entirely manufactured.
Pham hired Gotbit to inflate Robo Inu’s trading volume on exchanges like BitMart and Uniswap, creating the illusion that the token was gaining traction. Gotbit’s wash trading bots executed thousands of trades, pushing Robo Inu’s daily volume above $1 million. This fake activity caught the attention of retail investors, who rushed to buy into what they believed was the next big meme coin.
As the price surged, Pham and other insiders quietly sold their tokens, leaving retail investors with nothing when the price eventually collapsed.
The manipulation of Robo Inu was so effective that the token briefly ranked among the top trending coins on CoinMarketCap, further driving the narrative that it was a must-buy for investors. By the time the scheme was uncovered, many investors had lost significant amounts of money, and Pham ultimately pleaded guilty to market manipulation and fraud.
Saitama: Gotbit’s Most Ambitious Scheme
Another token manipulated by Gotbit was Saitama, a decentralized finance (DeFi) project founded by Russell Armand and Manpreet Kohli. The Saitama token entered the market with grand promises of revolutionizing DeFi, and it quickly gained a following among retail investors in the U.S. However, behind the scenes, the project’s success was fueled by Gotbit’s wash trading services.
Between 2022 and 2023, Gotbit inflated Saitama’s trading volume on platforms like LBank and XT.com, pushing it to over $1 million per day. The manipulation worked—Saitama’s market cap soared to $7.5 billion, attracting even more investors. The project became a media darling, with cryptocurrency news outlets touting its meteoric rise as a sign of the growing popularity of DeFi.
However, the token’s success was short-lived.
Once real investors began pouring in, the insiders behind Saitama cashed out, leaving the price to plummet. Many investors were left holding worthless tokens, and the project’s collapse tarnished the reputation of the DeFi space. Armand and Kohli were later charged with market manipulation, and both pleaded guilty.
The Global Reach of Gotbit: Collaborations with Other Market Makers
While Gotbit was the primary actor in the manipulation schemes, it wasn’t operating alone. Andriunin’s firm collaborated with other market makers, including ZM Quant and CLS Global, both of which were implicated in similar fraudulent activities. These firms worked closely with Gotbit to inflate the trading volumes of tokens across multiple exchanges, including both centralized platforms like Binance and decentralized exchanges (DEXs) like Uniswap.
ZM Quant, a Hong Kong-based market maker led by Ricky Lau, specialized in manipulating trading volumes on decentralized platforms. The firm used bot farms—large clusters of automated trading programs—to inflate volumes and simulate organic activity. CLS Global, a UAE-based firm led by Andrey Zhorzhes, operated similarly, using a network of bots to manipulate token prices on platforms like Pancakeswap.
Zhorzhes allegedly sold their services as:
- “We have an algorithm that . . . basically does self-trades, buying and selling.”
- “The idea of volume generation is . . . so the token looks organic and looks live and people get interested in trading it.”
- “It’s very hard to track. . ..We’ve been doing that for many clients.”
- “I know that it’s wash trading and I know people might not be happy about it.”
Operation Token Mirrors: How The FBI Created Its Own Token to Take Down Gotbit
By 2023, Gotbit’s manipulation had attracted the attention of U.S. law enforcement agencies, including the Federal Bureau of Investigation (FBI), the Internal Revenue Service Criminal Investigation (IRS:CI) and the National Cryptocurrency Enforcement Team (NCET), together with Portugal’s Policia Judiciaria European Network of Fugitive Active Search Team (ENFAST), and the United Kingdom’s National Crime Agency’s National Extradition Unit (NEU).
The agencies launched a full-scale investigation into the Gotbit’s activities, focusing on how the firm and its collaborators were inflating trading volumes and manipulating token prices.
On its website, the Belize-registered Gotbit promoted “purportedly legitimate services” while “privately offering clients illegal services including market manipulation” as the indictment 24cr10190 of the District Court of Massachusetts states.
The key to the investigation was a sting operation code-named Operation Token Mirrors, in which the FBI created a fake cryptocurrency called NexFund AI. NexFund AI was designed to look like a legitimate blockchain project, complete with a functional Ethereum-based token and marketing materials. The FBI even set up a fake website to make the project appear real.
Gotbit and other market makers took the bait, offering their services to manipulate NexFund AI’s trading volume. Over 300 fake trades were conducted, providing law enforcement with critical evidence of market manipulation. The FBI also used blockchain forensics tools like Chainalysis to trace millions of dollars in cryptocurrency transfers tied to Gotbit, mapping out the flow of funds across multiple wallets and exchanges.
By October 2024, the FBI had gathered enough evidence to arrest Aleksei Andriunin in Portugal, where he had moved to evade Russian authorities. Alongside Andriunin, 14 individuals and four companies were indicted, including key figures from ZM Quant and CLS Global. The charges ranged from conspiracy to commit market manipulation to wire fraud and money laundering.
As the U.S. Attorney's Office, District of Massachusetts states:
“This investigation, the first of its kind, identified numerous fraudsters in the cryptocurrency industry. Wash trading has long been outlawed in the financial markets, and cryptocurrency is no exception. These are cases where an innovative technology – cryptocurrency – met a century old scheme – the pump and dump. The message today is, if you make false statements to trick investors, that’s fraud. Period. Our Office will aggressively pursue fraud, including in the cryptocurrency industry,” said Acting United States Attorney Joshua Levy. “These charges are also a stark reminder of how vigilant online investors must be and that doing your homework before diving into the digital frontier is critical. People considering making investments in the cryptocurrency industry should understand how these scams work so that they can protect themselves.”
The Impact on Retail Investors and Exchanges
The fallout from Gotbit’s manipulation schemes was devastating for retail investors, many of whom lost significant amounts of money after being lured into buying manipulated tokens. Thousands of investors had poured their savings into tokens like Robo Inu and Saitama, only to see their investments evaporate when the schemes collapsed. For many, the experience shattered their trust in the cryptocurrency market.
Exchanges that had facilitated the trades, such as Binance and BitMart, faced backlash for allowing the manipulation to occur on their platforms. While these exchanges were not directly involved in the fraud, their lack of oversight made it easier for firms like Gotbit to carry out their schemes undetected. In response, several exchanges introduced more stringent KYC (Know Your Customer) and AML (Anti-Money Laundering) standards to prevent similar incidents in the future.
Legal Fallout: The Push for Stricter Regulations
The Gotbit scandal has prompted regulators worldwide to take a closer look at the cryptocurrency market. In the United States, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have proposed new rules that would require real-time trade monitoring on all cryptocurrency exchanges operating within U.S. borders. These rules are designed to detect wash trading and other forms of market manipulation before they can cause significant harm to investors.
Internationally, bodies like the Financial Action Task Force (FATF) are pushing for global adoption of stricter AML and KYC standards, particularly for decentralized platforms. These measures would make it harder for market manipulators to operate anonymously, reducing the likelihood of similar schemes occurring in the future.
The legal fallout for those involved in the Gotbit case has been severe. Aleksei Andriunin faces decades in prison if convicted, and his associates, including key figures from ZM Quant and CLS Global, are facing similar charges. Several of the companies involved have had their assets frozen, and ongoing investigations are expected to reveal more details about the extent of the fraud.
The Future of Crypto Regulation
The rise and fall of Gotbit has underscored the need for greater regulation in the cryptocurrency market. While the industry has long prided itself on decentralization and a lack of central authority, the Gotbit scandal has shown that these features can also enable fraud.
Moving forward, regulators are likely to impose stricter oversight on both centralized and decentralized exchanges, with an emphasis on preventing market manipulation and protecting retail investors.
At the same time, there are concerns that over-regulation could stifle innovation in the space. Cryptocurrency has thrived in part because of its freedom from traditional financial systems, and many in the industry fear that too much regulation could drive legitimate projects away from the market. Balancing the need for investor protection with the desire to maintain the industry’s innovative spirit will be a key challenge for regulators in the coming years.
Lessons Learned from the Gotbit Scandal
The Gotbit scandal serves as a stark reminder of the risks associated with unregulated markets. While cryptocurrency offers immense potential for innovation and financial freedom, it also provides fertile ground for fraud and manipulation. The fallout from Gotbit’s schemes has prompted a global push for stricter regulations, with the goal of preventing similar incidents in the future.
For retail investors, the lesson is clear: due diligence is essential in the world of cryptocurrency.
While the promise of quick profits can be tempting, not all projects are what they seem. The Gotbit scandal has shown that even tokens with high trading volumes and rankings can be manipulated, and investors must be cautious when entering the market.
As regulators work to catch up with the rapid pace of innovation in cryptocurrency, the Gotbit case may serve as a turning point. The industry is at a crossroads, and the future of cryptocurrency will depend on finding the right balance between innovation and regulation, ensuring that the next big project isn’t just another scam waiting to implode.
And if you want to hear Aleksei Andriunin talk about his elaborate scheme, after reading all about his cryptocurrency scam, here’s an interview he did back in 2019:
