It Takes a Fake Token to Catch a Volume Faker

Last week, the DOJ unveiled an indictment against Gotbit, which CoinDesk profiled in 2019. Election 2024 coverage presented by

In 2019, CoinDesk published an article about a company co-founded by Alexey Andryunin that aimed to fabricate trading volume for small-cap cryptocurrencies to secure listings on CoinMarketCap. Now, Andryunin is among the dozen people and entities charged by the DOJ for allegedly wash trading cryptos.

The U.S. Department of Justice (DOJ) announced a bevy of crypto-related charges last week, accusing over a dozen individuals and entities of بازارساز بودنه and defrauding people. Among those named in the indictment are Gotbit, CLS Global, MyTrade and ZM Quant.

The DOJ alleges these companies were engaged in wash trading cryptos, and their operators and some token promoters were defrauding investors as a result.

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.

Back in 2019, Andryunin told former CoinDesk reporter Anna Baydakova that he co-founded a company designed to make it appear that random small-cap cryptocurrencies had real trading volume, with the express purpose of making these tokens appear active enough to secure a listing on CoinMarketCap and draw attention from larger companies.

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

Five years later, prosecutors appear to agree. Andryunin was arrested in Portugal for extradition to the U.S.

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

The other interesting detail: The FBI worked on its own fake token, with a real contract you could track on-chain, called NexFundAI. Its website, which now features a massive “FBI” banner, looked remarkably legit – that is to say, like a lot of other AI-focused crypto tokens making vague but extravagant promises.