The FBI recently took the unprecedented step of launching its own cryptocurrency, called NexFundAI, as part of an operation aimed at combating financial market manipulation. This innovative initiative helped dismantle a complex network of fraudsters operating in the crypto sector.
The FBI launches its own crypto for an unprecedented operation!
The operation was triggered after the SEC alerted the FBI to suspected market manipulation activities by cryptocurrency company Saitama. In response, the FBI created NexFundAI, a fictitious crypto, to infiltrate and observe the fraudulent practices of “market makers” who manipulated token prices through techniques such as wash trading.
The investigation revealed that several companies and individuals were using bots to conduct fictitious transactions, creating a false impression of demand and artificially inflating token prices. Entities involved included crypto companies like Saitama, Robo Inu, VZZN, and Lilian Finance, as well as market-making firms like Gotbit, ZM Quant, CLS Global, and MyTradeMM.
To trap the fraudsters, the FBI held meetings with these “market makers,” offering them crypto market manipulation services using NexFundAI. The suspects were caught red-handed when they agreed to manipulate the price of NexFundAI in exchange for payments.
Results and implications
The operation led to the indictment of 18 individuals and organizations for fraud and other financial crimes. The bots responsible for millions of dollars in fraudulent transactions have been disabled, and several of the accused have already pleaded guilty. This case marks the DOJ's first criminal prosecution of financial services companies for crypto market manipulation.
The FBI's initiative to create its own crypto to combat fraud represents a major step forward in the regulation of digital financial markets. Using innovative methods, the FBI not only managed to dismantle a network of fraudsters, but also sent a strong message to bad actors in the crypto sector: market manipulation, like that observed at Ripple (XRP), will not be tolerated .
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