In October 2024 the U.S. Department of Justice and the SEC charged three self-described market makers, Gotbit, ZM Quant and CLS Global, plus MyTrade and individuals, with providing wash trading (fake volume) to token promoters, after an FBI operation that created its own token to catch them. Gotbit and its founder were later sentenced, with about USD 23 million ordered forfeited; CLS Global pleaded guilty and was sentenced in April 2025 to probation and about USD 428,000 in fines and forfeiture; MyTrade’s founder pleaded guilty and was fined. The common thread: they sold “volume” rather than measurable spread and depth.
Key takeaways
- The cases came from an FBI sting in which agents created their own token and hired the firms.
- What was sold: volume packages and “market support” executed through self-trades between accounts the firm controlled.
- A legitimate market maker sells spread, depth and uptime, measured per venue, never a volume figure.
- Contracts should ban wash and self-trading and give you read-only data access.
The cases at a glance
| Firm | Charged by | What was alleged | Outcome (per sources) |
|---|---|---|---|
| Gotbit | DOJ (Oct 2024) | Wash trading and market manipulation services for token clients | Firm and founder sentenced in 2025; about USD 23M ordered forfeited |
| CLS Global | DOJ and SEC (Oct 2024) | Wash trading for clients, including the FBI’s own test token | Guilty plea (Jan 2025); sentenced Apr 2025 to 3 years’ probation and about USD 428,000 in fines and forfeiture |
| MyTrade | DOJ (Oct 2024) | “Volume support” via bots across about 60 tokens | Founder pleaded guilty; fined USD 10,000 |
| ZM Quant | SEC (Oct 2024) | Wash trading for token promoters | Charged; check court records for status |
Sources are the SEC and DOJ releases plus Reuters and Decrypt coverage linked below. Outcomes are as reported on the dates shown; check court records for updates.
What the fake offers looked like
- A volume figure as the product: daily volume targets, “volume support” or “chart support”.
- Ranking promises: volume aimed at getting onto data aggregators’ trending lists.
- No order-book KPIs: nothing about spread, depth at ±2%, or uptime.
- Opaque execution: no read-only access, no fills, only screenshots.
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What a legitimate engagement looks like
- Two-sided quotes on named venues and pairs, with spread, depth and uptime written into the contract. Public example: TrueFi’s 2025 proposal specified a 30 bps spread, USDT 40,000 depth per 2%, and 95% uptime (public deal terms).
- A clause that prohibits wash trading and self-trading.
- Read-only API keys or sub-accounts so you can verify balances and fills.
- A clear structure (retainer, token loan, profit share or LP-side) with the incentives explained. See retainer vs loan.
Before you sign with anyone
Search the firm’s legal entity name in SEC, DOJ, CFTC and your local regulator’s releases and in court records, call references whose pairs you can check, and compare at least three proposals on the same scope. Our market maker profiles and red flags guide help.
Frequently asked questions
What did the so-called market makers do?
According to the SEC and DOJ, they used algorithms or bots to trade a client’s token between wallets or accounts they controlled, creating the appearance of active trading so promoters could attract buyers. The SEC called the firms “so-called market makers”.
How did the cases end?
Per DOJ releases, Gotbit and its founder were sentenced in 2025 and about USD 23 million was ordered forfeited. CLS Global pleaded guilty in January 2025 and in April 2025 was sentenced to three years’ probation and about USD 428,000 in fines and forfeiture, and barred from U.S. crypto markets during probation (as reported by Reuters and Decrypt). MyTrade’s founder pleaded guilty and was sentenced to a USD 10,000 fine (as reported by Decrypt). ZM Quant was charged by the SEC; check court records for the current status.
How can I tell a real market maker from a wash-trading service?
Real market makers commit to two-sided quotes with spread, depth at ±2%, and uptime targets, and accept a contract clause banning wash and self-trading. Fake ones sell volume, “chart support”, or guaranteed rankings. See market making vs wash trading and red flags.
Could a token project be liable for hiring a wash-trading firm?
In these cases, promoters and project insiders who paid for fake volume were also charged. Get legal advice for your jurisdiction, and never pay for volume.
Sources
- U.S. SEC press release 2024-166: SEC charges three so-called market makers and nine individuals
- U.S. DOJ, District of Massachusetts: Eighteen individuals and entities charged in international operation targeting widespread fraud and manipulation in the cryptocurrency markets (Oct 2024)
- U.S. DOJ: Gotbit and founder sentenced for market manipulation (2025)
- Reuters: Cryptocurrency financial firm to plead guilty after novel FBI probe (Jan 2025)
- Decrypt: Crypto market maker hit with $428,000 fine over wash trading (2025)
- Decrypt: MyTrade founder fined $10K over bots that wash traded 60 cryptocurrencies
Last reviewed 12 November 2026. Exchange and platform policies change; always confirm on the official page before acting.