The FBI Created a Cryptocurrency to Catch Scammers
Date: 2024-10-11 Author: Henry Casey Categories: CRYPTO PAYMENTS
The FBI says the strategy has been successful, leading to market manipulation and fraud charges against several crypto companies, including Gotbit, CLS Global, MyTrade, and ZM Quant, as well as 18 individuals. The agency seized more than $25 million in cryptocurrency and shut down several trading bots that were allegedly manipulating about 60 cryptocurrencies.
“What the FBI found in this case is a new twist on classic financial crime,” said Jodi Cohen, a special agent in charge of the FBI’s Boston office.
As part of Operation Token Mirror, the FBI created an Ethereum (ETH)-based cryptocurrency called NexFundAI Token to identify scammers developing, promoting, and manipulating tokens. The defendants allegedly lured investors with false promises and engaged in “selling and selling,” a deceptive practice in which trades are made to create the appearance of increased activity and demand in the market. The manipulations artificially inflated the price of the tokens, allowing the fraudsters to sell their holdings at inflated prices. Unbeknownst to the manipulators, the FBI had created the token as part of the operation.
“This investigation, the first of its kind, has exposed numerous fraudsters in the cryptocurrency industry. Selling and selling has long been illegal in financial markets, and cryptocurrency is no exception,” said Acting U.S. Attorney Joshua Levy.
The SEC has also filed civil lawsuits against Gotbit, CLS, ZM Quant, Saitama, and other companies, accusing them of violating securities laws. Trading of the NexFundAI token was suspended, but its price increased by 1,558% while the scammers were active.
