Federal complaint draws parallels to DOJ’s recent crypto enforcement wave, cites ties to convicted market manipulator Gotbit
Brad Bao, the co-founder and former CEO of electric scooter company Lime, has been named as a defendant in a federal racketeering lawsuit that plaintiffs describe as “one of the largest crypto frauds in history.”
The complaint, filed in U.S. District Court for the Northern District of California (Case No. 3:26-cv-00857), invokes the same federal RICO statute that prosecutors have used to dismantle organized crime syndicates and, more recently, to pursue cryptocurrency fraudsters.
Plaintiffs Goopal Digital Limited and Vivian Liu are seeking $100 million in compensatory and punitive damages.
A familiar playbook for federal prosecutors
The lawsuit’s allegations mirror patterns that have drawn aggressive enforcement from the U.S. Department of Justice and Securities and Exchange Commission in recent years.
Federal authorities have made cryptocurrency fraud a top priority. The DOJ’s Southern District of New York—the same office that secured convictions against FTX founder Sam Bankman-Fried (sentenced to 25 years), Celsius CEO Alex Mashinsky, and Terraform Labs’ Do Kwon—has prosecuted dozens of crypto executives for schemes strikingly similar to what’s alleged in this complaint: pump-and-dump schemes, wash trading, misappropriation of investor funds, and false statements to investors.
The SEC has likewise ramped up enforcement, bringing actions against crypto projects for unregistered securities offerings and fraud. Under current SEC leadership, the agency has made clear that token offerings fall squarely within securities laws.
Gotbit connection raises red flags
Particularly notable is the complaint’s allegation that defendants worked with Gotbit, a cryptocurrency firm whose founder, Alex Andryunin, was recently convicted of wire fraud and market manipulation by federal prosecutors.
According to the complaint, Gotbit used automated “bots” to conduct “wash trading”—creating fake trading volume to disguise the defendants’ massive sell-off of tokens. The DOJ has called wash trading “a cornerstone of crypto market manipulation” and has aggressively pursued firms engaged in the practice.
Gotbit’s conviction came as part of the DOJ’s “Operation Token Mirrors,” which resulted in charges against multiple crypto market makers. The complaint alleges the same firm was paid to help Jin and his associates liquidate over $41 million in tokens while concealing the sales from investors.
“One of the largest crypto frauds in history”
The complaint does not mince words, calling the scheme “one of the largest crypto frauds in history” and alleging a coordinated conspiracy involving Jin’s family members, offshore shell companies, and complicit board members.
According to the filing, defendants raised approximately $42.96 million from over 5,000 retail investors—many of them U.S. citizens who purchased tokens through platforms like Republic under Regulation D, which requires accurate disclosures to accredited investors. This ICO was one of the largest U.S. public token sales on Republic’s platform since 2021.
The complaint alleges Jin secretly liquidated $41.78 million in Cere tokens immediately after the November 2021 launch while publicly claiming insider tokens were “locked.” The proceeds were allegedly routed through personal exchange accounts belonging to Jin’s wife, Maren Schwarzer, and his brother, Xin Jin, then laundered through a network of shell companies spanning Delaware, the British Virgin Islands, Panama, and Germany.
An additional $16.6 million in investor funds was allegedly siphoned directly from company wallets and gambled away in failed DeFi investments, resulting in catastrophic losses.
The lawsuit highlights governance concerns, alleging that board oversight failures enabled insider transactions and conflicted dealings. Corporate governance experts note that board approval and fiduciary oversight are central to investor protection in venture-backed technology companies.
Brad Bao’s alleged role
Bao, who gained prominence as co-founder of the $2.4 billion scooter startup Lime, allegedly served as a board member who “lent credibility” to the scheme while receiving director’s fees and an early token allocation.
The complaint alleges Bao “approved many transactions that Jin designed to misappropriate funds for personal use” and later “turned a blind eye to the accounting fraud that Jin conducted to cover up the scheme.”
The filing also notes that Bao and his companies have been involved in prior litigation, including a fraud action against the City of San Francisco and a lawsuit by venture fund Khosla Ventures alleging fraud and intentional interference over a collapsed $30 million acquisition.
The lawsuit highlights governance concerns, alleging that board oversight failures enabled insider transactions and conflicted dealings. Corporate governance experts note that board approval and fiduciary oversight are central to investor protection in venture-backed technology companies.
Potential regulatory exposure
While the case is civil, similar allegations in other matters have drawn regulatory scrutiny from federal authorities. The DOJ has demonstrated a willingness to bring criminal charges following civil RICO findings, particularly in cases involving:
• Wire fraud (the complaint cites multiple instances of allegedly fraudulent communications)
• Securities fraud (tokens sold to U.S. investors under Reg D)
• Money laundering (the complaint traces funds through multiple jurisdictions)
• Market manipulation (the alleged Gotbit arrangement)
The U.S. Attorney’s Office for the Southern District of New York and the DOJ’s Criminal Division have active crypto enforcement units that regularly coordinate with civil plaintiffs’ attorneys and SEC investigators.
The filing comes amid heightened scrutiny of digital asset markets following a series of high-profile collapses and enforcement actions that have reshaped regulatory expectations across the industry.
Other defendants
In addition to Bao, the lawsuit names Fred Jin (CEO), Maren Schwarzer (Jin’s wife), Xin Jin (Jin’s brother), Martijn Broersma (CMO), Francois Granade (board member), and corporate entities Cerebellum Network Inc., Interdata Network Ltd., and CEF AI Inc.
The Cere token, which peaked at $0.47, now trades at approximately $0.0012—a decline of over 99%.
The full federal complaint is available here.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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