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The Federal Bureau of Investigation (FBI) created an Ethereum-based token called NexFundAIto enter cryptocurrency world. But before you set thinking why, the purpose of the NexFundAI crypto coin was part of a sting operation to expose manipulation in cryptocurrency markets. According to a report in The Verge, the FBI’s Ethereum-based token was created with the help of “cooperating witnesses.”
The operation reportedly led to charges against 30 individuals and entities, including three “market makers” and nine others accused of manipulating the prices of certain crypto assets.The defendants allegedly engaged in “wash trades,” a practice where a trader simultaneously buys and sells the same asset to create the illusion of trading activity.
Prosecutors allege that the market makers, ZMQuant, CLS Global, and MyTrade, were unaware that NexFundAI was a creation of the FBI. They are accused of conspiring to wash trade the token, contributing to the fraudulent scheme. As per The Verge report, Liu Zhou, a “market maker” working with MyTrade MM, allegedly told promoters of NexFundAI that MyTrade MM was better than its competitors because they “control the pump and dump” allowing them to “do inside trading easily.”
The FBI’s operation highlights the growing sophistication of financial crimes within the cryptocurrency space. As Jodi Cohen, the special agent in charge of the FBI’s Boston division, stated, “What we uncovered is essentially a new twist to old-school financial crime.”
An FBI spokesperson reportedly told CoinDesk that there was limited trading activity on the coin but didn’t share additional information. The DOJ is said to have secured $25 million from “fraudulent proceeds” that will be returned to investors.
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