Gotbit Founder Surrenders $23M in Exchange for No Prison Time

Gotbit Founder Surrenders $23M in Exchange for No Prison Time

TLDR

• Gotbit founder Aleksei Andriunin reached a plea deal to forfeit $23 million in crypto assets
• He pleaded guilty to market manipulation and wire fraud charges
• If approved, he would avoid prison time but face 36 months of supervised release
• During supervised release, he cannot participate in any crypto activities
• Gotbit allegedly engaged in “wash trading” to artificially boost trading volumes between 2018-2024

Aleksei Andriunin, the founder of crypto market maker Gotbit, has reached a plea agreement with U.S. authorities that would allow him to avoid prison time in exchange for forfeiting $23 million in cryptocurrency assets. The agreement comes after Andriunin pleaded guilty to one count of market manipulation and two counts of wire fraud.

Court documents show that if the plea deal is approved, Andriunin would only face up to 24 months of incarceration, followed by 36 months of supervised release. This is much less than the maximum 20-year prison sentence he originally faced for his charges.

The 26-year-old founder was extradited to the United States in late February after being arrested in Portugal four months earlier. He was accused of taking part in a long-running “wash trading” scheme between 2018 and 2024 while serving as Gotbit’s CEO.

Wash trading involves making fake trades that create the false impression of market activity. Andriunin allegedly used this method to artificially boost trading volumes for various crypto projects.

Forfeit $23 Million

As part of the plea agreement, Andriunin has agreed to forfeit around $23 million worth of stablecoins from four separate wallets. This includes nearly $14 million in Tether (USDT) stored in two different crypto wallet addresses.

The agreement also includes about $9 million in USDC kept in two other crypto wallets. All these assets are listed as property of Gotbit Consulting LLC, but the wallets are solely controlled by Andriunin on Gotbit’s behalf.

Federal prosecutors estimated that the charges could result in fines of $500,000 or twice the amount gained or lost from the offenses. However, if the plea deal is approved, Andriunin would not need to pay any extra fines beyond the $23 million asset forfeiture.

During the three years of supervised release, Andriunin will not be allowed to take part in any crypto activities. This restriction is part of the conditions set forth in the plea agreement.

The U.S. Attorney for the District of Massachusetts stated in the court document that “Defendant agrees to assist fully in the forfeiture of the above assets. Defendant agrees to promptly take all steps necessary to pass clear title to the above assets to the United States.”

Gotbit is one of four companies charged by U.S. prosecutors in what has been called the first criminal prosecution targeting market manipulation in the crypto industry. The other three companies are ZM Quant, CLS Global, and MyTrade.

Market Manipulator

According to federal prosecutors, Gotbit operated as a sophisticated market manipulation enterprise. The company offered token price-inflating services to various crypto projects, including some based in the United States.

The Securities and Exchange Commission (SEC) filed a separate complaint against Gotbit and its marketing director, Fedor Kedrov. In this complaint, the regulator claimed that the crypto firm kept detailed records comparing artificially “created volume” against natural “market volume” in crypto markets.

Court documents allege that Gotbit’s activities caused financial harm to market participants who bought crypto “at fraudulently inflated prices.” The firm’s business practices raised many red flags in the industry.

In fact, in a 2019 interview that was later referenced in Justice Department filings, Andriunin himself admitted that Gotbit’s business model was “not entirely ethical.” This admission has now come back to haunt him in the legal proceedings.

The letter detailing the plea agreement has been communicated to both the court and defense counsel. It outlines provisions allowing either party to withdraw if the court rejects any element of the deal.

While the agreement suggests no prison time, the court still has final say over the sentencing terms. This means the judge could potentially adjust the terms of the agreement.

After news of the charges broke last year, many meme coin projects that had partnered with Gotbit quickly tried to distance themselves from the company. Some token teams that had depended on Gotbit for liquidity issued statements disavowing their relationship with the firm.

The post Gotbit Founder Surrenders $23M in Exchange for No Prison Time appeared first on CoinCentral.