US DoJ Aims To Boost Market Trust By Targeting Meme Coin Scammers

The United States Department of Justice (DoJ) has initiated a crackdown on fraud within the meme coin market, which is primarily aimed at key players to restore trust in the sector and safeguard investors against manipulative practices.

Currently, the meme coin market is among the fastest-growing segments in all of crypto, boasting a market value exceeding $47 billion as of October 10th. Most recently, NEIRO, a popular meme coin on Ethereum (ETH) known for its vibrant online community, experienced a remarkable rise of over 40% in just 24 hours. 

Rife With Fraud

Leading coins such as Dogecoin, Shiba Inu, and Pepe dominate this space, with significant trading volumes and valuations. Despite its rapid expansion, the meme coin sector is rife with fraudulent activities. Recently, the DoJ targeted four cryptocurrency companies and 14 individuals engaged in illicit trading operations, recovering over $25 million in crypto assets and highlighting the manipulation prevalent in the market.

One of those implicated was Aleksei Andriunin of GoBit, a prominent market maker for meme coins. GoBit and others faced allegations of wash trading, a method employed to fabricate market activity and deceive investors. Such market manipulation is prohibited in the US and various other countries. By artificially inflating trading volume, these firms misled traders, leading to substantial financial losses.

A Long Way To Go

Some analysts, including those at Santiment, view the actions taken by the DoJ as a beneficial move for the industry. They argue that eliminating manipulative entities like GoBit could enhance market confidence in the future, signaling that deceptive tactics will face consequences and potentially attracting cautious investors.

While short-term confidence might wane, the long-term prospects for meme coins could improve with greater transparency and reduced manipulation. Should GoBit re-enter the market, it is likely to operate more transparently, fostering a fairer trading environment for all participants.