FBI Creates Its Own Crypto Token to Entrap Market Manipulators
- DDDOriginal
- 2024-10-10 16:32:32788browse
An undercover operation is hardly out of the ordinary for the U.S. Federal Bureau of Investigation (FBI). However, this would be the first time the bureau has created its own crypto token in the name of justice.
The Federal Bureau of Investigation (FBI) has created its own cryptocurrency token in a sting operation to uncover crypto market manipulators.
According to a recently unsealed indictment, several firms, including Gotbit, CLS Global, MyTrade and ZM Quant, and 18 individuals have been charged with artificially inflating the price of tokens by executing sham trades in exchange for payment. One of the tokens in question was ‘NexFundAI’ — an Ethereum-based cryptocurrency created by the FBI to entrap the manipulators.
“This marks the first time that the FBI has created its own cryptocurrency token in the name of justice,” said Special Agent Jodi Cohen, who is in charge of the FBI’s Boston Field Office, calling it an “unprecedented step.”
According to data from DEXScreener, the NexFundAI token is still trading, with a market capitalization of $177,000. Trading volume for the token has reportedly surged by 5,000% over the last 24 hours, reaching $3.5 million.
“This investigation, the first of its kind, identified numerous fraudsters in the cryptocurrency industry. Wash trading has long been outlawed in the financial markets, and cryptocurrency is no exception,” said Acting United States Attorney Joshua Levy in a statement.
The FBI is also urging individuals who have been impacted by trading tokens associated with the fraud to reach out, listing its own token alongside coins like Saitama, Robo Inn, VZZN and Lillian Finance.
The U.S. Securities and Exchange Commission (SEC) also brought separate lawsuits against Gotbit Consulting, ZM Quant Investment and CLS Global.
According to Conor Grogan, the director of Web3 at Coinbase, onchain activity shows that wallets linked to the FBI have recently made several memecoin trades.
“Not sure if the FBI realized this, but they doxxed their wallets. Shortly after deployment, the wallet that seeded the FBI wallet deployed capital to multiple other wallets, making dozens of trades. FBI wallets own at least 75% of the token supply from what I can tell,” said Grogan on X.
Grogan’s analysis revealed that FBI-linked wallets own coins like Pornrocket, EthereumMAX and BONE. It is unclear whether those coins were sent to the FBI’s linked wallet addresses by other users.
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