FBI Launches Fake Cryptocurrency to Catch Market Manipulators
Recently, it was revealed that the FBI created a fake cryptocurrency called NexFundAI and a shell company to catch crypto scammers manipulating the markets. The U.S. Department of Justice has charged 18 individuals and companies with using illegal schemes to inflate token prices and make huge profits. This is the first time the Department of Justice has prosecuted financial companies for market manipulation in the crypto industry.
How the Scam Worked
One of the main schemes used by the scammers was wash trading—artificially creating the appearance of demand for tokens through fake buy and sell orders. Such schemes are common on offshore exchanges, where independent experts estimate that up to 50% of all trades may be fake. The criminals simply conducted sham transactions between affiliated parties.
FBI’s Undercover Operation
To uncover these schemes, the FBI created the NexFundAI cryptocurrency, operating on the Ethereum blockchain, and made contact with market manipulators. One of the accused, who called himself the “mastermind,” explained that his company used bots to simultaneously buy and sell tokens on exchanges, creating the illusion of trading activity and inflating prices. He charged $2,000 for his services. The bots continued to generate millions in trading volume until they were shut down at the request of authorities.
Involvement of Crypto Platforms
One of the companies involved in the manipulation was the crypto platform Saitama, registered in Massachusetts. Saitama worked with a company called Gotbit, which helped artificially inflate the value of their tokens, creating a market capitalization of $7.5 billion. While token prices were being pumped up, company executives secretly sold off their assets, making millions in profits.
International Reach and Legal Action
Some of the accused operated from abroad, in countries such as Portugal and Russia. So far, five people have already pleaded guilty or agreed to do so soon. In addition to criminal prosecution, the U.S. Securities and Exchange Commission (SEC) has filed civil lawsuits against the manipulators, accusing them of violating securities laws.