Gotbit Consulting LLC a/k/a Gotbit Hedge Fund and Fedor Kedrov
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26156 / October 15, 2024
Securities and Exchange Commission v. Gotbit Consulting LLC a/k/a Gotbit Hedge Fund and Fedor Kedrov, No. 1:24-cv-12589-AK (D. Mass. filed Oct. 9, 2024)
SEC Charges So-Called Market Maker and Its Employee in Crackdown on Manipulation of Crypto Assets Offered and Sold As Securities
The Securities and Exchange Commission announced fraud charges against Belize entity Gotbit Consulting LLC a/k/a Gotbit Hedge Fund, a self-proclaimed crypto asset market maker, and its employee Fedor Kedrov for engaging in a scheme to manipulate the market for “Robo Inu,” a crypto asset being offered and sold as a security to retail investors. As alleged, the scheme was intended to induce investor victims to purchase Robo Inu by creating the false appearance of an active trading market for it.
According to the SEC’s complaint, crypto asset promoter Vy Pham hired so-called market maker Gotbit to provide market-manipulation-as-a-service, which included generating artificial trading volume for the Robo Inu crypto asset that Pham offered and sold as a security to retail investors in unregistered transactions. The SEC alleged that Gotbit and Kedrov manipulated the market on behalf of Pham by self-trading (commonly referred to as “wash trading”) on popular crypto asset trading platforms or by engaging in other trading practices that likewise served no economic purpose, and that they used an algorithm (or bot) that, at times, generated more than $1 million dollars of artificial trading volume each day.
The SEC’s complaint, filed in the United States District Court for the District of Massachusetts, charges Gotbit and Kedrov with violating Sections 17(a)(1) and (3) of the Securities Act of 1933, and Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder. The complaint seeks permanent injunctions, conduct-based injunctions, disgorgement of allegedly ill-gotten gains plus interest, and civil penalties.
The SEC appreciates the assistance of the FBI and the United States Attorney’s Office for the District of Massachusetts, which has announced a parallel criminal action.
The SEC’s investigation was conducted by David D’Addio, Amy Harman Burkart, Ivan Panchenko, Jeffrey Cook, and John McCann in the SEC’s Boston Regional Office, as well as Colin Missett and Joy Guo of the Crypto Asset and Cyber Unit (CACU). They were supervised by Amy Gwiazda, Michael Brennan, Donald Battle, and Jorge Tenreiro of CACU and by Celia Moore and John T. Dugan of the Boston Regional Office. The team also thanks the staff of the SEC’s Office of Strategic Hub for Innovation and Financial Technology for their assistance. The litigation will be led by Mr. D’Addio and Ms. Burkart.