(In first paragraph please read "Three cryptocurrency companies

and 15 individuals" instead of four companies and 14

individuals. In second paragraph please read "leaders and

employees of those and other companies" instead of "their

leaders and employees" -- corrects number of companies and

individuals.)

By Nate Raymond

BOSTON, Oct 9 (Reuters) -

Three cryptocurrency companies and 15 individuals have been

charged in what U.S. prosecutors on Wednesday called the first

criminal prosecution of financial services firms for market

manipulation and sham trading in the crypto sector.

Federal prosecutors in Boston charged the firms Gotbit,

ZM Quant and CLS Global and the leaders and employees of those

and other companies in a case that also involved the arrest of

people overseas. Five people have agreed to plead guilty or have

already done so.

Prosecutors accused the defendants of engaging in the crypto

equivalent of stock market "pump and dump" schemes that involved

sham trades to artificially inflate the trading volume of

various cryptocurrency tokens before selling them off.

Prosecutors said the largest of the companies involved in

the various schemes, Saitama, at one point came to have a market

value of $7.5 billion, after its leadership began manipulating

the market for its tokens and secretly selling them.

Its chief executive, Manpreet Kohli, was arrested on Monday

in the United Kingdom. Five other current or former employees

were also charged, and three have pleaded guilty.

Others charged were Aleksei Andiunin, the chief executive of

Gotbit, a cryptocurrency "market maker" who lived in Russia and

Portugal. He was charged along with two of his company's

employees in Russia and could not be reached for comment.

Prosecutors said that from 2018 to 2024, Gotbit engaged

in a form of market manipulation called "wash trading" on behalf

of several cryptocurrency clients, earning tens of millions of

dollars at the expense of investors. In wash trading, a

financial asset is bought and sold for the express purpose of

misleading the market.

Prosecutors cited a 2019 interview Andiunin gave in a

YouTube view in which he detailed how his business had developed

a code to artificially inflate trading volume for tokens for the

purposes of getting them listed on crypto exchanges.

Three other individuals residing overseas who worked at

cryptocurrency "market makers" that prosecutors said advertised

market manipulation services to clients were also charged.

They are Liue Zhou, the Chinese founder of market maker

MyTrade, who according to court papers has agreed to plead

guilty; Baijun Ou of Hong Kong, who worked at ZM Quant, and

Andrey Zhorzhes of the United Arab Emirates, an employee of CLS

Global.

They could not be immediately reached for comment.

Others charged were Michael Thompson of Virginia, who worked

at a cryptocurrency company called VVZZN founded by a former

Saitama employee, and Bradley Beatty of Florida, who prosecutors

said fraudulently promoted his crypto company, Lillian Finance.