FBI Creates Fake Token to Lure Fraudsters, Seizes $25M, Charges 18
The FBI created a fake crypto token to expose fraud. Eighteen charged in historic case, uncovering $25M in market manipulation.
Highlights:
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The FBI created a fake cryptocurrency to uncover fraud, charging eighteen individuals.
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The operation exposed rampant market manipulation and wash trading practices in the crypto industry.
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The DOJ's indictment marks the first prosecution against financial firms for crypto manipulation.

A groundbreaking operation has unfolded as the FBI unsealed a major criminal case against eighteen individuals and companies. Accusations include manipulating cryptocurrency markets to inflate token values for profit.
This historic indictment marks the Department of Justice's first prosecution against financial firms for crypto manipulation. In a surprising twist, the FBI created a fake cryptocurrency to lure the alleged fraudsters.
A Bold Strategy to Expose Fraud
The FBI’s investigation uncovered rampant market manipulation in the crypto industry. This scheme involves artificially inflating prices. Practices like wash trading allow traders to create false demand.
Such actions harm the crypto market, with estimates suggesting significant trading inflation, especially on offshore exchanges. The DOJ's indictment specifically targets three market makers and their employees.
Prosecutors allege these parties offered wash trading services for payment. The investigation is dubbed “the first of its kind” by the DOJ, revealing a long-standing issue of pump-and-dump schemes plaguing markets for years.
To catch the alleged fraudsters, the FBI launched a cryptocurrency called NexFundAI on the Ethereum blockchain. Agents arranged meetings with market makers, pretending to be clients seeking trading services.
During discussions, one defendant claimed to be the “mastermind.” He explained how his company used automated bots to generate trading volume.
His operation was bold, asking for a $2,000 upfront payment. Even last week, these bots continued executing millions in wash trades before law enforcement intervened.
Widespread Implications and Continued Investigation
Many defendants operated internationally, with links to Portugal and Russia. Five individuals have pleaded guilty or agreed to do so.
Several worked for Saitama, a Massachusetts-based crypto firm accused of manipulating its token price to create a market valuation of $7.5 billion. Allegations suggest that Saitama executives secretly sold tokens, reaping tens of millions in profits.
A cofounder of Gotbit, a key market maker, previously admitted his firm was “not entirely ethical.” The Securities and Exchange Commission has also joined the investigation.
As investigations continue, the FBI's proactive measures shed light on the darker corners of cryptocurrency. For now, the organization is seeking to restore trust and integrity to the market.
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