FBI Exposes Wash Trading Tactics Used by Crypto Token Developers, Promoters, and Market Makers

The Federal Bureau of Investigation (FBI) has exposed a wash trading operation involving crypto token developers, promoters, and market makers.

The Federal Bureau of Investigation (FBI) has exposed a wash trading operation involving crypto token developers, promoters, and market makers. According to a report from the U.S. Department of Justice (DOJ), four cryptocurrency companies, four market makers, and their employees allegedly conspired to manipulate crypto users and steal substantial amounts of money.

Kaiko Research, the crypto data analysis firm, provided insights on how the FBI systematically tracked the suspects. According to Kaiko Research, the FBI created a DeFi firm, NexFundAI and released a native token, using the process to track and expose what the DOJ described as a first-of-a-kind occurrence in the crypto sector.

First a recap. 18 individuals and entities face charges after an FBI-led investigation. These individuals and their firms engaged in algorithmic wash trading, pump and dump schemes, and other manipulative tactics, often on DeFi exchanges like Uniswap.

FBI Exposes Wash Trading Tactics

In what Kaiko called a prime example of wash trading in DeFi, the FBI’s undercover project revealed how crypto tokens flowed from NexFundAI to market makers’ wallets and then to numerous other wallets. These funds were then used for wash trading on the token’s only secondary market, which was set up by the issuer on Uniswap.

The FBI reportedly identified 18 individuals who played various roles in the Wash Trading Pump-and-Dump scheme. The charging documents against the alleged fraudsters stated that they created cryptocurrency companies and made false statements about their native tokens. Continuing with their scheme, the suspects executed sham trades in those tokens to create the illusion of trading activity and make the tokens appear like profitable investments.

Read also: Binance Fires Investigator Who Implicated VIP Clients in $300M Wash Trading

The deceptive actions attracted investors who bought those tokens, leading to more price inflation, after which the creators sold their holdings at artificially inflated prices. As of writing, the DOJ reported that four arrested suspects have pleaded guilty, with another defendant agreeing to plead the same. The authorities had apprehended three other defendants in Texas, the United Kingdom, and Portugal and seized over $25 million in cryptocurrency.

The article presents interesting information regarding the FBI’s investigation into a wash trading operation. However, it is crucial to note that the information provided in this article is solely for educational and informational purposes. This article does not constitute any form of advice, whether financial or otherwise. Coin Edition and its team hold no responsibility for any losses incurred as a direct or indirect result of using the content, products, or services mentioned in this article. Before making any decisions based on the article’s content, readers are strongly advised to exercise caution and conduct their own thorough research.

The above is the detailed content of FBI Exposes Wash Trading Tactics Used by Crypto Token Developers, Promoters, and Market Makers. For more information, please follow other related articles on the PHP Chinese website!