FBI creates crypto company to uncover illicit market manipulation
To fight crypto market manipulation, the FBI has launched NexFundAI, a cryptocurrency company with its token on the Ethereum blockchain.
This initiative is part of a sting operation aimed at exposing and prosecuting those involved in inflating token prices for personal gain.
The move comes in response to a major criminal case unveiled by the Department of Justice (DOJ), implicating 18 individuals and companies in market manipulation schemes.
The FBI created NexFundAI to infiltrate illegal trading circles and identify bad actors, including firms like ZM Quant, CLS Global, and MyTrade.
These companies are accused of artificially boosting the value of certain tokens through tactics like wash trading, where fake buy and sell orders create a false sense of market demand.
According to analysts, up to 50% of trading volume on some exchanges may be manipulated in this way.
The DOJ’s case is the first of its kind, marking a significant step in law enforcement’s crackdown on crypto fraud.
Special Agent Jodi Cohen highlighted the unprecedented nature of the operation, with the FBI posing as a legitimate crypto firm to lure manipulators into revealing their tactics.
One of the defendants, who described himself as a “mastermind” of wash trading, was caught after agreeing to meet FBI agents while requesting a $2,000 payment upfront for his services.
In one instance, bots run by market makers linked to the defendants inflated trading volumes to millions of dollars, artificially driving token prices.
The indictment also revealed ties to Saitama, a crypto firm that manipulated its token value to an impressive $7.5 billion market cap.
NexFundAI, though still trading with a modest market cap of $237,000, served as the bait in this high-profile operation.
