FBI Launches NexFundAI Token to Combat Crypto Fraud in Major Market Manipulation Case
The FBI has developed its own token, NexFundAI, to uncover fraudulent activities within the cryptocurrency market. NexFundAI has led US prosecutors in Boston to file charges against 18 individuals and entities, including four prominent crypto firms—Gotbit, ZM Quant, CLS Global, and MyTrade—in a case focused on market manipulation.
The charges arise from extensive fraud involving market manipulation and “wash trading,” which aimed to mislead investors and artificially inflate cryptocurrency values. Acting undercover, the FBI created the token to lure the indicted firms, which allegedly specialized in inflating trading volumes and prices for profit.
“The FBI took the unprecedented step of creating its very own token and company to identify, disrupt, and bring these alleged fraudsters to justice,” stated Jodi Cohen, Special Agent in Charge of the FBI’s Boston Division.
The charges involve a broad scheme of wash trading, where the defendants reportedly inflated the value of over 60 tokens, including the Saitama Token, which reached a peak market capitalization of $7.5 billion.
The conspirators allegedly made false claims about the tokens and used deceptive practices to mislead investors. After artificially boosting the token prices, they would cash out at these inflated values, executing a classic “pump and dump” scheme.
Additionally, the crypto firms reportedly employed market makers like ZM Quant and Gotbit to conduct these wash trades. These firms executed sham transactions using multiple wallets, obscuring the true nature of the activity while generating fake trading volume to enhance the tokens’ appeal to investors.
One employee from ZM Quant described the practice as a means to “make other buyers lose money in order to make a profit.”
Authorities have seized over $25 million in cryptocurrency and disabled multiple trading bots linked to millions in wash trades. Several defendants have already pleaded guilty or indicated their intention to do so, while others were apprehended in the US, the UK, and Portugal.
Assistant US Attorney Joshua Levy stressed that wash trading has long been prohibited in traditional financial markets, and the same regulations now apply to the cryptocurrency sector. This operation, dubbed “Operation Token Mirrors,” marks a significant effort to combat fraud in the rapidly growing digital asset landscape.
The defendants, who are presumed innocent until proven guilty, face severe consequences, including potential prison sentences of up to 20 years for charges related to market manipulation and wire fraud. This case serves as a stark reminder of the risks associated with the crypto market and the necessity of due diligence when investing in digital assets.
