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The FBI developed NexFundAI, a token of its own, to uncover dishonest players in cryptocurrency. As a result, four significant cryptocurrency companies - Gotbit, ZM Quant, CLS Global, and MyTrade and eight other people and corporations, have been charged by U.S. prosecutors in Boston with manipulating the market.
The allegations resulted from extensive fraud involving "wash trading" and market manipulation intended to mislead investors and increase the value of cryptocurrencies. The FBI secretly introduced the token in an attempt to attract the services of the convicted firms, which were purportedly experts at manipulating trading volumes and prices for financial gain.
FBI’s Fake Crypto Token
To fight against fraudulent activities in the cryptocurrency space, the FBI boldly designed and released a fictitious token on the Ethereum network named NexFundAi. This was no average token; rather, it was a skillfully constructed trap designed to draw in people who were manipulating the market for their own benefit.
The FBI's Boston Division oversaw the operation, and U.S. Attorney Joshua Levy emphasized its importance. According to Levy, it was a warning to anyone deceiving investors. He made it very evident that misleading investors to obtain financial advantage is fraud and will not be accepted.
How did it happen?
Wash trading involves placing fake buy and sell orders to increase the actual trading volume of tokens and create the appearance that they are more famous than they actually are. By boosting the value of over 60 cryptocurrencies, including one with a $7.5 billion market capitalization, these companies had a clear impact on the market, as demonstrated by the use of the FBI's token.
Investors were tricked into thinking they were buying valuable tokens as a result of the manipulation; nonetheless, the scammers would later sell the tokens for inflated prices, generating enormous profits.
Charges and Seizures
Authorities have already seized more than $25 million worth of cryptocurrency and disabled several bots that were used to make illegal trades totalling millions of dollars. Some of the accused have pleaded guilty, while others are still waiting for trial. If they are found responsible for wire fraud and market manipulation, they face up to 20 years in jail.
Assistant U.S. Attorney Joshua Levy emphasized that similar to traditional financial markets, wash trading is prohibited by the laws that now govern the bitcoin market.
It is crucial to keep in mind that fraudulent activity will not go unnoticed and that the justice system still has access to Bitcoin marketplaces.
