2024-10-14 06:12:00
Sophisticated fraud exposed by an unprecedented FBI strategy
When you want to spot scammers, what’s better than setting a trap for them? This is precisely what the FBI did by creating its own cryptocurrency, NexFundAI. The US Department of Justice revealed today that it was this police administration that was behind the mysterious cryptocurrency. The investigation that the creation of NexFundAI enabled led to the indictment of 18 individuals and companies for manipulation of tokens. This case constitutes the first criminal prosecution of this scale against companies involved in the manipulation of digital financial markets.
NexFundAI, a fictitious cryptocurrency, is based on the Ethereum blockchain. The fraudsters, some of whom proclaimed themselves “masters” of fraudulent practices, used bots to simulate trading volumes on centralized platforms, a technique called “wash trading.” This manipulation involves generating fake buy and sell orders to create an appearance of high demand, thereby misleading investors.
A vast infiltration operation that bore fruit
The manipulators engaged with the fake NexFundAI crypto project, going so far as to demand payments in exchange for their artificial trading services. Thanks to this fake company’s cover, the FBI was able to arrange in-person meetings and infiltrate international fraud networks. This innovative tactic has led to arrests in the United States, United Kingdom and Portugal. A total of 18 individuals and companies, including companies such as ZM Quant and MyTrade, are accused of orchestrating this massive fraud.
Among the main defendants is Massachusetts-based cryptocurrency company Saitama, which manipulated the value of its token to achieve a market capitalization of $7.5 billion. Saitama collaborated with market makers like Gotbit, a company whose questionable practices had already been recognized by its co-founder. According to the indictment, Saitama executives secretly sold their tokens, pocketing tens of millions of dollars in undeclared profits.
The Securities and Exchange Commission also filed a complaint
The case, in addition to being prosecuted criminally, also gave rise to civil complaints from the US Securities and Exchange Commission (SEC), accusing the manipulators of violating securities laws. Around 50% of transaction volumes on certain platforms could thus be artificially inflated, which underlines the scale of the problem in the sector. Although some fraudsters have already pleaded guilty, the investigation continues, with the aim of identifying other actors involved on a global scale.
This FBI operation demonstrates that even in an environment as innovative as cryptocurrencies, decades-old fraud techniques continue to thrive. However, this intervention marks a decisive turning point in the fight against these crimes, thanks to methods that are as bold as they are effective.
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