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The U.S. Department of Justice has exposed widespread crypto market manipulation through an undercover operation, creating its own cryptocurrency token and company called NexFundAI. The arrests and charges of several individuals and entities demonstrate the FBI's commitment to protecting retail investors from fraudulent activity in the markets for crypto assets.
The US Department of Justice created its own cryptocurrency token and company, NexFundAI, as part of an undercover operation to expose widespread crypto market manipulation. Three market makers and their employees were charged with allegedly wash trading and conspiring to wash trade on behalf of NexFundAI. A fourth market maker, Gotbit, its CEO, and two directors were also charged for perpetrating a similar scheme. The total number of individuals and entities ensnared in the investigation was 18, with five defendants pleading guilty or agreeing to plead guilty. The defendants executed bogus trades using their own tokens to synthetically inflate trading prices, and sold them at new prices through pump-and-dump schemes. Multiple trading bots behind wash trading were disabled for about 60 different cryptocurrencies as part of the investigation. The individuals involved were accused of executing fraudulent activities to illegally profit from financial crimes.
The U.S. Department of Justice (DoJ) has taken a drastic measure to expose widespread crypto market manipulation, creating its own cryptocurrency token and company called NexFundAI as part of an undercover operation. The law enforcement action, codenamed Operation Token Mirrors, has led to the arrests and charges of several individuals and entities in connection with allegedly manipulating digital asset markets.
The story begins with the creation of NexFundAI, a cryptocurrency company and token that was marketed as redefining the "intersection between finance and artificial intelligence." According to information on the website, the aim of NexFundAI was to "create a cryptocurrency token that not only serves as a secure store of value but also acts as a catalyst for positive change in the world of AI."
However, it soon became apparent that NexFundAI was nothing more than a tool used by law enforcement to expose widespread crypto market manipulation. Three market makers – ZM Quant, CLS Global, and MyTrade – along with their employees, were charged with allegedly wash trading and/or conspiring to wash trade on behalf of NexFundAI.
A fourth market maker, Gotbit, its CEO, and two of its directors, were also charged for perpetrating a similar scheme. The total number of individuals and entities ensnared in the investigation's net was 18, out of which five defendants had either pleaded guilty or agreed to plead guilty. Three other defendants were arrested in the U.S. state of Texas, the U.K., and Portugal.
The court documents alleged that the defendants behind the cryptocurrency companies executed bogus trades using their own tokens to give the impression that they are good investments in an attempt to attract new investors and purchasers, thereby synthetically inflating the tokens' trading prices. The individuals then sold their tokens at the new prices, a fraudulent scheme known as pump-and-dump, in order to illegally profit from the financial crime.
The use of wash trading, also known as round trip trading, was prevalent among the defendants. This illegal practice involves buying and selling the same financial instruments to create artificial market activity. In this case, multiple trading bots behind wash trading were disabled for about 60 different cryptocurrencies.
The individuals involved in the operation were accused of executing bogus trades using their own tokens to give the impression that they are good investments in an attempt to attract new investors and purchasers, thereby synthetically inflating the tokens' trading prices. The individuals then sold their tokens at the new prices, a fraudulent scheme known as pump-and-dump, in order to illegally profit from the financial crime.
The following individuals and cryptocurrency firms have been charged:
- Aleksei Andriunin
- Fedor Kedrov
- Qawi Jalili
- Gotbit Consulting LLC (Gotbit)
- Riqui Liu
- Baijun Ou
- ZM Quant Investment LTD (ZM Quant)
- Andrey Zhorzhes
- CLS Global FZC, LLC (CLS)
- Liu Zhou
- MyTrade MM
- Manpreet Kohli
- Haroon Mohsini
- Nam Tran
- Max Hernandez
- Russell Armand
- Vy Pham
- Saitama LLC (Saitama)
- Robo Inu Finance (Robo Inu)
- Michael Thompson
- VZZN
- Bradley Beatty
- Lillian Finance LLC (Lillian Finance)
The arrests and charges are a testament to the U.S. Department of Justice's commitment to protecting retail investors from fraudulent activity by institutional actors in the markets for crypto assets. Sanjay Wadhwa, deputy director of the SEC's Division of Enforcement, stated that "Today's enforcement actions demonstrate once more that retail investors are being victimized by fraudulent activity by institutional actors in the markets for crypto assets."
With purported promoters and self-anointed market makers teaming up to target the investing public with false promises of profits in the crypto markets, investors should be mindful that the deck may be stacked against them. The use of fake cryptocurrency tokens and companies is a common tactic used by fraudsters to deceive unsuspecting investors.
In conclusion, the FBI's Operation Token Mirrors has exposed widespread crypto market manipulation, resulting in arrests and charges of several individuals and entities. The use of wash trading and pump-and-dump schemes was prevalent among the defendants, and multiple trading bots were disabled for about 60 different cryptocurrencies.
The story serves as a reminder to retail investors to be cautious when investing in cryptocurrency markets, especially when dealing with unsolicited investment opportunities or promises of unusually high returns.
Related Information:
https://thehackernews.com/2024/10/fbi-creates-fake-cryptocurrency-to.html
https://www.techspot.com/news/105096-fbi-creates-fake-cryptocurrency-sting-operation-catch-market.html
Published: Sat Oct 12 00:38:42 2024 by llama3.2 3B Q4_K_M
