Gotbit founder to face charges in the US for allegedly offering wash trading as a service

Aleksei Andriunin appeared in federal court in Boston on Feb. 26 after arriving in the United States the day before. Andriunin, the founder and CEO of crypto market maker Gotbit is charged with wire fraud and conspiracy to commit market manipulation and wire fraud in connection with wash trading activities.

Gotbit allegedly offered wash trading services to cryptocurrency issuers. Wash trading is the practice of carrying out sham trades to inflate trading volume and give the impression of high market demand. Gotbit sales director Qawi Jalili, director of market making Fedor Kedrov,  and the company itself have also been charged. According to Reuters’ Kedrov and Jalili are thought to be located in Russia.

Gotbit allegedly offered wash trading for years

Gotbit allegedly collected tens of millions of dollars for its services between 2018 and 2024. Andriunin, a 26-year-old Russian national, allegedly transfers millions of dollars of company money to his personal Binance account. He was arrested in Portugal on Oct. 8 and extradited. He will remain in custody until his trial.

If found guilty of the wire fraud, Andriunin could be sentenced to up to 20 years in prison and a fine of up to $250,000 or twice the gross gain or loss from the offense. The conspiracy charge could bring another five years in prison and a fine of up to $250,000 or twice the gross gain or loss from the offense.

Gotbit Hedge Fund, which still operates, describes its activities as “crafting and executing a tailored growth strategy for your token. Our primary goal is to generate buy pressure within your market.” It claims on its website to have 180+ employees, as well as 1.3 billion [dollars?] in assets under management for 400+ institutional clients.

The FBI caught four companies doing wash trading at the same time

Gotbit’s downfall came about due to a complex sting operation by the U.S. Federal Bureau of Investigation (FBI) called Operation Token Mirrors in October. The FBI created a token called NexFundAI (NEXF) and engaged the services of four companies to promote it.

The company does not seem to have been involved in promoting NEXF, but it promoted tokens whose illicit backgrounds were uncovered in the larger investigation. Operation Token Mirrors led to charges against 18 people and eight companies in all. Trades with 60 cryptocurrencies were deactivated and $25 million in cryptocurrency was seized. NEXF is still being traded.

Online crypto investigator ZachXBT had warned against dealing with Gotbit a year earlier. “I would be weary of any projects you see working with the market maker @gotbit_io as a leaked report shows highly questionable services offered,” he wrote on X.

Among the members of its “community” shown on its website are Binance, Bybit, Crypto.com, HashKey, KuCoin and OKX.

Nobody knows you when you’re an alleged wash trader

Another party in the Gotbit debacle was the tremendously popular Telegram-based game Hamster Kombat. Gotbit announced in April that it was the Hamster Kombat team’s “official advisor on their web3 journey.” After Operation Token Mirrors was wound up, Hamster Kombat denied that it had ever worked with Gotbit.

The company also claimed to work with the memecoin BONK beginning in August 2023. It is known to have worked with the NEIRO team. The developers of that memecoin cut ties with Gotbit after the FBI operation. 

ZachXBT took the NEIRO team to task for ignoring his warning. NEIRO’s anonymous CTO co-lead S responded. S said the team needed to find a market maker fast when it was okayed for listing on HTX and it was its only “warm connection.” 

S continued, “I had heard various bad things about Gotbit. Similarly, I’ve heard various bad things for pretty much everyone in this industry, so it’s difficult to apply discretion.” ZachXBT was not mollified.

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