The FBI created its own crypto token called ‘NexFundAI’

[zasad@]

https://www.msn.com/en-us/money/companies/the-fbi-created-its-own-crypto-token-called-nexfundai-to-take-down-market-manipulators/ar-AA1rZ4um

"On Wednesday, a judge unsealed a wide-ranging criminal case brought by the Department of Justice against eighteen individuals and companies accused of manipulating crypto markets and artificially boosting tokens. According to the complaint, the operation targeted one crypto firm with a multi-billion-dollar market value, and relied on a ruse involving a new cryptocurrency spun up by the FBI.

The indictment is the first criminal prosecution by the DOJ against financial services firms for crypto market manipulation, after previously charging an individual, Avraham Eisenberg, who was convicted in April for rigging a platform called Mango Markets.

The most notable feature of the case, though, was the methods employed by the Federal Bureau of Investigations to nab the defendants. According to a statement from Jodi Cohen, the special agent in charge of the FBI's Boston office, the Bureau took the "unprecedented step" of creating its own cryptocurrency token and a fake company to help ensnare the alleged crooks."

According to the crypto price tracker DEX Screener, NexFundAI is still trading actively with a market cap of around $237,000.
https://dexscreener.com/ethereum/0xc5d3a48c21b50298ebd180370817d04217672549

[Sanitough]

The FBI did a great job, creating a way to verify if exchanges are really manipulating their trading volume. We all know this kind of thing happens, especially with lesser-known exchanges. Even popular ones have rumors of doing the same, but they’re more cautious since regulators are keeping an eye on them.

With a trading volume of under $1 million, they were able to steal millions of dollars doing such... an insane level of theft from unsuspecting traders. It's definitely still scamming since they used their platform to take advantage of the traders who didn’t know better. I think this tactic could help in shutting down shady exchanges, especially if the FBI continues creating tokens to bait them. But of course, exchanges are probably aware of this now, so they’ll likely find new ways to keep doing what they do.

Still, this news highlights that these things are really happening, so it’s a reminder for traders to choose reputable exchanges with legitimate trading volume.

[DaveF]

Nice to see them adapting to the times. Too many times law enforcement has to keep playing catch up to what the criminals have come up with.
Years ago when they did this: https://www.engadget.com/fbi-encrypted-chat-app-anom-criminals-102001487.html

It showed that after years of playing catch up to new tech, they were catching on.

Wonder what they are working on now. Guess we will find out when they arrest the next bunch of criminals.

-Dave

[tbct_mt2]

The FBI did a great job, creating a way to verify if exchanges are really manipulating their trading volume. We all know this kind of thing happens, especially with lesser-known exchanges. Even popular ones have rumors of doing the same, but they’re more cautious since regulators are keeping an eye on them

In 2019 Bitwise has a report on Wash Trading volume on centralized exchanges. It likes a bomb on named exchanges with wash trading volume.

Bitwise Asset Management Analysis of real Bitcoin trading volume.

They came to a conclusion that " on average, 95% of the reported Bitcoin trading volume is fake.

After that report from Bitwise, CoinMarketCap Will Alter Listing Metrics After Latest Fake Volume Research.

Nice to see them adapting to the times. Too many times law enforcement has to keep playing catch up to what the criminals have come up with.

It's good adaptation from FBI but it reminds me about one educational initiative by theymos years ago.

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[Davidvictorson]

This is very innovative of the FBI.

I guess the motto goes, "To catch a criminal, you have to think and act like one". It is like using crypto to catch the crypto thief. We would be seeing more of this type of innovative move from these agency. Other Agencies in other countries should follow suit too because there are other variants of manipulators too. By the way what happens to the crypto token created now that they have achieved their goal, they make profit off of it? or what?

[yhiaali3]

As I read in some news elsewhere, three market makers — ZM Quant, CLS Global, and MyTrade — have been charged with unlawful trading or conspiracy to commit unlawful trading, with federal prosecutors in Boston charging these companies, their leaders, and their employees in a sweep that also included arrests abroad. Five people have already agreed to plead guilty or have done so.

Creating a fake coin “NexFundAI” to catch suspects is a smart move by the FBI, I hope we see more of these moves to rid the market of the scammers that have become so prevalent.

[Z-tight]

I am sure this multi billion dollar firm didn't see that coming, the FBI creating a honeypot cryptocurrency to catch market manipulators and people who artificially boost tokens is not such a bad one, it is actually innovative. However, other manipulators will learn from this case and they will be on the look out for something like this, though the FBI might come up with something different next time.

[Fiatless]

I am sure this multi billion dollar firm didn't see that coming, the FBI creating a honeypot cryptocurrency to catch market manipulators and people who artificially boost tokens is not such a bad one, it is actually innovative. However, other manipulators will learn from this case and they will be on the look out for something like this, though the FBI might come up with something different next time.

These days, bots can do just anything, and it has become a viable tool in the hands of scammers. Having bots that buy and sell just to deceive investors that there is demand for such tokens is their style. As technology progresses, these manipulators will seek alternative means of reaping people or their hard-earned money. The US agencies like the FBI are also advancing in their ways of attacking these criminals. I bet that in some countries, these scammers might never be detected for a long time. The US is always ahead.

[FinneysTrueVision]

It was only a matter of time before law enforcement started taking action against market manipulators who blatantly use pump and dump schemes to inflate token prices. I suspect many of the tokens listed on exchanges like Binance are guilty of using these sort of tactics. There is no way that some of these coins that nobody’s ever heard of and barely have any on-chain activity should be worth tens or hundreds of millions in total market cap.

[zasad@]

It was only a matter of time before law enforcement started taking action against market manipulators who blatantly use pump and dump schemes to inflate token prices. I suspect many of the tokens listed on exchanges like Binance are guilty of using these sort of tactics. There is no way that some of these coins that nobody’s ever heard of and barely have any on-chain activity should be worth tens or hundreds of millions in total market cap.

I think that all start-up projects use the services of market makers, who can also be manipulators.
Experienced companies have good lawyers who teach people how to call services with the right words and they have no problems with the regulator.It is only possible to prove such an offence through controlled purchase and managers must be legally illiterate to fall into such a trap.

[Kryss191]

https://www.msn.com/en-us/money/companies/the-fbi-created-its-own-crypto-token-called-nexfundai-to-take-down-market-manipulators/ar-AA1rZ4um

"On Wednesday, a judge unsealed a wide-ranging criminal case brought by the Department of Justice against eighteen individuals and companies accused of manipulating crypto markets and artificially boosting tokens. According to the complaint, the operation targeted one crypto firm with a multi-billion-dollar market value, and relied on a ruse involving a new cryptocurrency spun up by the FBI.

The indictment is the first criminal prosecution by the DOJ against financial services firms for crypto market manipulation, after previously charging an individual, Avraham Eisenberg, who was convicted in April for rigging a platform called Mango Markets.

The most notable feature of the case, though, was the methods employed by the Federal Bureau of Investigations to nab the defendants. According to a statement from Jodi Cohen, the special agent in charge of the FBI's Boston office, the Bureau took the "unprecedented step" of creating its own cryptocurrency token and a fake company to help ensnare the alleged crooks."

According to the crypto price tracker DEX Screener, NexFundAI is still trading actively with a market cap of around $237,000.
https://dexscreener.com/ethereum/0xc5d3a48c21b50298ebd180370817d04217672549

The fact that the FBI actually created their own crypto token to catch market manipulators is pretty next-level.

[pakhitheboss]

They went to the next level to nab those criminals and bring them behit bars. This is the first time that I have read that an investigating agency created a cryptocurrency to hunt those criminals. Since the crypto is still being traded after this news  coming out either the market capitalisation will go up or go down.

[zasad@]

More news about market makers/manipulators. Looks like there's a new trend

https://www.msn.com/en-us/money/markets/jump-trading-faces-allegations-of-token-price-manipulation-in-fracturelabs-lawsuit/ar-AA1spVx8

"FractureLabs, a video game developer, has filed a lawsuit against Jump Trading, a major cryptocurrency market maker. The firm is accused of using its DIO gaming token to operate a market manipulation. FractureLabs alleged that in 2021, it entered an agreement with Jump as a market maker to assist with an initial offering of its DIO token on the crypto exchange Huobi, now HTX.

FractureLabs accuses Jump Trading of DIO price manipulation
FractureLabs asserts that after hiring Jump to manage the market for the DIO token, it transferred 16 million DIO tokensᅳ10 million to Jump, and an additional 6 million to HTX (formerly Huobi). Following a promotional campaign by influencers, the token’s price surged to $0.98, giving Jump’s holdings a value of $9.8 million.

Expand article logo  Continue reading

According to the lawsuit, Jump then sold off its tokens at this inflated price, after which the DIO token crashed to less than half a cent. FractureLabs alleges that Jump intentionally caused this market downturn by repurchasing the token at a discounted rate and violating its commitment to serve as the market facilitator.

They further assert that Jump failed to uphold their responsibility to uphold the token’s value and exited the agreement shortly after the downturn occurred. The lawsuit further alleges that HTX withheld $1.5 million in Tether, which FractureLabs had deposited, due to the token price collapse. "

[Kevystia]

This case sends a strong message: regulators are ready to use sophisticated methods to uphold the integrity of the cryptocurrency market, which could deter future attempts at manipulation.

[avikz]

Well I am happy that the scamsters are nabbed down by FBI with proof of manipulation. It's a good job done. Crypto market is full with scammers and frauds and it needs constant cleaning. It's an ongoing process to ensure the integrity of the market. So I think it's positive. Creating a new token to gather evidence is a great move, indeed! Such kind of sophisticated methods are needed for such technically complicated cases and I think FBI killed it.

[DaveF]

Slightly OT from this but, above I mentioned when the FBI created the 'encrypted' communications system and SOLD it to criminals and it gave them full access to everything that the criminals were doing with those devices.

Here is a good video about it: https://www.youtube.com/watch?v=uFyk5UOyNqI

So, when more and more details from this token come out it's going to be interesting to see how they did it.

-Dave

[YOSHIE]

The FBI created its own crypto token called ‘NexFundAI’

Have the circumstances and conditions of the times changed now, legally this is a laugh-out-loud situation. The FBI is starting to come together and change the situation in the crypto world which they previously took legal action against crypto especially now they have started looking for coffers in the crypto market, it is really surprising to see the FBI creating their own token.

But whatever they do about crypto, I don't believe in their tokens, I believe they can do anything to the price of their tokens, they have the law in their hands to regulate what they want, but on the bright side they are aware that crypto is the best alternative to increase their income, so they created the token, the FBI is starting to enter a serious situation in the crypto market, which used to eradicate is now a member of the FBI.

[bias]

According to the crypto price tracker DEX Screener, NexFundAI is still trading actively with a market cap of around $237,000

Sorry to make such a simple and perhaps naive question but since this token is still in the market, who do they expect to buy this token? And from where exactly?
They make it to trace and see the actions of a specific "shady" exchanger, not for every one of them. But if they do it once, for sure they will use it for the next similar case scenario. But I still don't understand how can this be still active...

[zasad@]

https://www.justice.gov/usao-ma/pr/founder-cryptocurrency-financial-services-firm-mytrade-pleads-guilty-market-manipulation

Founder of Cryptocurrency Financial Services Firm “MyTrade” Pleads Guilty to Market Manipulation and Fraud Conspiracy

"BOSTON – The founder and primary operator of “MyTrade,” a financial services firm known in the cryptocurrency industry as a “market maker,” pleaded guilty today in federal court in Boston for his role in a wide-ranging conspiracy to manipulate cryptocurrency markets on behalf of client cryptocurrency companies.

Liu Zhou, 39, of China and Canada, pleaded guilty today to conspiracy to commit market manipulation and wire fraud. U.S. District Court Judge Angel Kelley scheduled sentencing for Feb. 27, 2025.

MyTrade provided financial services to cryptocurrency clients through its “MyTrade MM” website and online application. Those services included the wash trading of client cryptocurrencies across multiple cryptocurrency exchanges. Wash trading occurs when a single trader, or a number of traders working in coordination, buy and sell the same asset repeatedly in order to mislead the market by artificially inflating the trading volume or price of the asset via trades that have no lawful commercial purpose. Wash trading is a form of fraud intended to stimulate interest in an asset and is specifically prohibited by the securities laws. MyTrade MM’s clients had access to a dashboard available through MyTrade MM’s website that allowed clients to specify the desired amount of daily wash trades—a service described as “Volume Support”—on identified cryptocurrency exchanges. MyTrade MM used computer programs known as “bots” to generate the fraudulent wash trades for clients."

[Fiatless]

Founder of Cryptocurrency Financial Services Firm “MyTrade” Pleads Guilty to Market Manipulation and Fraud Conspiracy

That's good news if they indeed committed the crime. These crypto platforms have made a fortune from manipulation while unsuspected investors lose money.

The charge of conspiracy to commit market manipulation and wire fraud provides for a sentence of up to five years in prison, up to three years of supervised release, a fine of up to $250,000 to twice the gross gain or loss from the offense, restitution and forfeiture.
https://www.justice.gov/usao-ma/pr/founder-cryptocurrency-financial-services-firm-mytrade-pleads-guilty-market-manipulation

MyTrade MM have been mandated to permanently deactivate its wash trading bots. It is now up to a Federal District Court judge to sentence them.