The FBI launched a cryptocurrency company and token to trap scammers involved in ‘pump-and-dump’ schemes. This method, which falsely inflates prices before cashing out, led to the arrest of 18 individuals for extensive fraud in crypto markets. It’s the first time criminal charges have been brought against financial firms for ‘wash trading’ in the crypto sector.
During the operation, over $25 million in cryptocurrency was seized, along with trading bots used for millions in ‘wash trades’ across around 60 cryptocurrencies, which have now been shut down.
‘Operation Token Mirrors’
The FBI’s created cryptocurrency, called NexFundAI and based on Ethereum, was used to monitor unsuspecting traders.
‘Wash trading’ is the illegal practice of buying and selling the same security to manipulate the market. Reports suggest that up to 70% of all cryptocurrency transactions involve wash trading, prompting police action.
Acting U.S. Attorney Joshua Levy stated, “This shows how cryptocurrency can be misused alongside traditional scams. If you deceive investors, it’s fraud.”
He advised investors to be cautious and informed about scams in the cryptocurrency space.
Additionally, three ‘market makers’ were charged by the SEC.
Recent statistics show a rise in crypto-related cybercrime, with stolen funds reaching about $1.58 billion in 2024.
Source: The Register
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