Yet crypto’s promised decentralized utopia finds itself time and again submerged under the weight of market manipulation. Such challenges were brought sharply into focus by the recent scandal surrounding Gotbit, a market-making company. They warn us of the tragic, sometimes deadly results of their abuse. Aleksei Andriunin, founder and chief executive of crypto trading firm Gotbit, pleaded guilty this week to wire fraud and conspiracy to commit market manipulation. His case serves as a warning of the severe criminal consequences for doing so. This case provides a glimpse into the specific tactics employed in crypto manipulation. Beyond footprints, it reinforces the important concept that investors must remain alert and on guard in the digital asset space.

During Andriunin’s leadership, Gotbit offered a full suite of market manipulation services. In 2023, they faked trading volume for hundreds of crypto exchanges between 2018-2024. The firm participated in “wash trading.” This common but illegal practice occurs when a single person or firm simultaneously buys and sells the same asset, creating the illusion of high demand and driving up the trading volume and price. This deceptive trading was intended to materially mislead investors. It produced the illusion of real interest and liquidity in the tokens that lured in even wider pools of participants and pumped up prices even further.

Today, the U.S. Attorney’s Office for the Southern District of New York announced a tremendously positive development. Andriunin plotted to artificially inflate the market price and committed wire fraud. Andriunin plead guilty to these charges in March 2025, admitting his participation in the illegal operation. This investigation and the legal action against Andriunin and Gotbit should be a strong message. Regulatory agencies are vigilant against manipulation in the rapidly changing crypto markets and will pursue robust prosecution against any attempts to manipulate the market for personal profit.

Understanding Crypto Market Manipulation

Market manipulation in the crypto realm often takes on a unique guise. Each of these tactics affects the market’s ability to discern a digital asset’s value and is intended to mislead investors. It’s important to identify these tactics if you’re looking to thrive in the competitive crypto market. That goes for advanced traders and new investors as well. Here are some common methods used by manipulators:

Common Manipulation Techniques

  • Pump and Dump Schemes: These schemes involve artificially inflating the price of a token by spreading false or misleading information, creating hype and excitement around the asset. Once the price reaches a certain level, the manipulators quickly sell their holdings at a profit, causing the price to crash and leaving other investors with significant losses.

  • Wash Trading: As seen in the Gotbit case, wash trading involves creating fake trading volume by buying and selling the same asset simultaneously. This gives the illusion of high demand and liquidity, attracting unsuspecting investors who believe the token is more popular and valuable than it actually is.

  • Market Manipulation through APIs: This sophisticated technique involves exploiting discrepancies in trading pairs queried by APIs across different exchanges. Manipulators can use these discrepancies to create artificial arbitrage opportunities, further distorting the market and misleading traders.

  • Large Market Purchases: Manipulators may use large market purchases to create the impression of strong buying pressure, driving up the price of a token. The case of FTX's FTT token provides a notable example of how large purchases can be used to manipulate market prices.

  • Exit Liquidity Traps: These traps are designed to create a situation where a token's price appears to be increasing, attracting buyers. However, the manipulators suddenly dump their holdings, causing the price to plummet and leaving the new buyers with substantial losses.

Red Flags for Crypto Investors

To protect themselves from falling victim to market manipulation, investors should be aware of certain red flags and warning signs. These include:

  • Unusual trading volume: Be cautious of assets with unusually high trading volumes, as this can be a sign of wash trading or other forms of market manipulation. A sudden spike in volume without any apparent reason should raise suspicion.

  • Pump and dump schemes: Be aware of coins with small market capitalizations that are not included in the top 100 list, as most pump and dumps take place in these types of coins. These smaller coins are easier to manipulate due to their lower liquidity and market depth.

  • Price manipulation: Look out for assets with sudden and unexplained price movements, as this can be a sign of market manipulation. A rapid and significant price increase or decrease without any fundamental news or developments should be viewed with skepticism.

  • Managed addresses: Be aware of addresses that received their first deposit from a controller address through a token multi-sender, as these addresses may be used for manipulative activities. These addresses may be part of a coordinated effort to manipulate the market.

  • Wash trading: Identify addresses that have engaged in suspected wash trading activities, such as trading with multiple DEX pools or executing a large number of trades in a short period. These activities can artificially inflate trading volume and mislead investors.

The Ripple Effect of Market Manipulation

The consequences of market manipulation are not limited to individual investors. It chips away at the core of the cryptocurrency ecosystem, with cascading effects that go well beyond the immediate impacts. Consultation is the best antidote. Manipulation in any form erodes trust and raises an audience’s perception of risk. Lastly, it tells a story that erodes confidence, corroding the integrity of the market and stunting its growth.

  • Erodes trust: Market manipulation in the cryptocurrency market can erode investor trust, making them more cautious and skeptical about investing in the market. When investors feel that the market is rigged or unfair, they are less likely to participate.

  • Increased risk perception: Manipulation can lead to a perception of increased risk, causing investors to view the market as more volatile and unpredictable. This can deter new investors from entering the market and cause existing investors to reduce their holdings.

  • Decreased confidence: Repeated instances of manipulation can decrease investor confidence in the market, leading to a decline in investment and a loss of credibility. A lack of confidence can stifle innovation and slow down the adoption of cryptocurrencies.

  • Lack of faith in market integrity: Manipulation can undermine the integrity of the market, leading investors to question the fairness and transparency of the market. This can create a negative perception of the entire cryptocurrency industry.

In many Asian markets, cultural predispositions tend to make investors trend chasers. This disposition leaves them wholly susceptible to hype-driven shamozzle exploitation. By learning these cultural nuances, investors will be better able to sidestep smart shortist manipulative tactics and make more informed investment decisions.

Staying Safe in the Crypto Wild West

Understanding the cryptocurrency market takes education, prudence, and a little skepticism too. There are many things investors can do to protect themselves from manipulation and feel confident making informed responsible investment decisions.

  1. Do Your Own Research (DYOR): Thoroughly research any cryptocurrency before investing. Understand the project's fundamentals, team, technology, and market potential. Don't rely solely on social media hype or endorsements from influencers.

  2. Diversify Your Portfolio: Avoid putting all your eggs in one basket. Diversifying your portfolio across multiple cryptocurrencies can help mitigate the risk of losses from any single manipulated asset.

  3. Use Reputable Exchanges: Stick to well-established and regulated cryptocurrency exchanges. These exchanges typically have stricter listing requirements and monitoring systems to detect and prevent market manipulation.

  4. Set Realistic Expectations: Be wary of projects promising unrealistic returns or guaranteed profits. The cryptocurrency market is highly volatile, and there are no guarantees of success.

  5. Stay Informed: Keep up-to-date with the latest news and developments in the cryptocurrency market. Follow reputable news sources, industry experts, and regulatory announcements.

  6. Use Stop-Loss Orders: Implement stop-loss orders to automatically sell your holdings if the price drops below a certain level. This can help limit your losses in the event of a sudden price crash caused by manipulation.

  7. Be Skeptical of Hype: Be cautious of projects that rely heavily on hype and marketing without providing solid fundamentals or technological innovation.

The Gotbit case is an important lesson for the crypto community. It further underscores the continuing need for regulatory oversight, investor education, and vigilance as the most effective weapons against market manipulation. As you may know, the cryptocurrency market is always changing. Through education, awareness, and vigilance, participants can help avoid becoming victims of fraud. By learning how these manipulators operate, investors will be better equipped to navigate the sometimes perilous crypto terrain. This understanding allows them to enter the market more informed and with stronger confidence, and contributes to a more transparent and trustworthy marketplace.