U.S. officials have charged 4 crypto companies with market manipulation and price manipulation of a token created by the FBI to set a trap.
FBI issued a token to set a trap and then charged crypto companies that specialize in "price manipulation"
The U.S. Department of Justice on 10/09 filed an indictment charging 4 crypto companies - Gotbit, ZM Quant, CLS Global, and MyTrade, along with 18 individuals in their leadership, with market manipulation and inflating the price of crypto tokens.
#BREAKING 18 individuals & entities charged w/ widespread fraud and manipulation in crypto markets. More than $25 million in crypto seized. Bots responsible for millions of dollars' worth of wash trades for approx. 60 cryptocurrencies deactivated.
— U.S. Attorney Massachusetts (@DMAnews1) October 9, 2024
🔗https://t.co/P8yp9feACS pic.twitter.com/pUpB2oiDSW
U.S. prosecutors said the 4 defendants had set up crypto projects but provided false information about them and engaged in wash trading to inflate trading volume, creating the illusion for investors that these were good projects with real demand. After the token price had increased to a certain level, the defendants proceeded to sell to cash out.
All 4 companies have agreed to plead guilty and have had $25 million worth of crypto assets seized.
Meanwhile, Gotbit, ZM Quant, CLS Global, and MyTrade were market makers hired to conduct wash trading of the tokens.
Specifically, to aid the investigation, the U.S. Federal Bureau of Investigation (FBI) created a token called "NexFundAI" to "set a trap", then hired market makers to create a market and gather evidence of criminal activity.
If you are wondering, here is the CA
— db (@tier10k) October 9, 2024
*Trading is disabled* https://t.co/AK7ruxWPze
so the @FBI launched a token…
— Bubblemaps (@bubblemaps) October 9, 2024
and the bubble map looked like this
they knew only fraudsters would jump in 😭 https://t.co/WqGOLCti6u pic.twitter.com/AoIw88ncuv
According to data from DEXTools, the NexFundAI token was created at the end of 05/2024, skyrocketed in the following days, then went through a long period of inactivity, before plummeting in late August and is now no longer trading.
Price chart of the NexFundAI token, screenshot from DEXTools at 10:55 AM on 10/10/2024
The U.S. Department of Justice stated that this is the first time U.S. authorities have prosecuted criminal behavior in the crypto financial services industry. This is seen as an increase in deterrence by U.S. authorities after statistics showed Americans lost $5.6 billion to crypto scams in 2023. Previously, U.S. authorities had also fined Binance exchange $4.3 billion in 11/2023 for money laundering allegations.
The case is also causing controversy in the crypto community on X (Twitter), as most are surprised by the FBI's actions to apprehend criminals, making everyone now have to be careful to avoid "falling into the government's trap" when interacting with obscure on-chain memecoin projects.
However, a slew of memecoin projects with names similar to NexFundAI have been created in the past few hours and are actively trading.
Tokens named NexFundAI are being traded, screenshot from DEXTools on the morning of 10/10/2024
Compiled by Coin68
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