{"id":6489,"date":"2024-10-23T23:52:56","date_gmt":"2024-10-23T23:52:56","guid":{"rendered":"https:\/\/finderica.com\/fbi-creates-its-own-crypto-token-to-nab-suspects-in-alleged-fraud-scheme\/"},"modified":"2024-10-23T23:52:56","modified_gmt":"2024-10-23T23:52:56","slug":"fbi-creates-its-own-crypto-token-to-nab-suspects-in-alleged-fraud-scheme","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=6489","title":{"rendered":"FBI creates its own crypto token to nab suspects in alleged fraud scheme"},"content":{"rendered":"
\n

Stay informed with free updates<\/p>\n<\/div>\n

\n

Eighteen people and companies face charges for \u201cwidespread fraud and manipulation\u201d after an FBI sting investigation in which authorities created their own cryptocurrency token, federal officials said on Wednesday.<\/p>\n

The US Department of Justice announced five defendants had pleaded or agreed to plead guilty and another three were arrested in Texas, the UK and Portugal this week in connection with a pump-and-dump probe, dubbed \u201cOperation Token Mirrors\u201d, which also seized more than $25mn in crypto assets. <\/p>\n

The gist of the scheme was \u201con-demand market manipulation\u201d on crypto trading platforms using algorithms or bots to generate \u201cquadrillions of transactions and billions of dollars of artificial trading volume each day\u201d, the Securities and Exchange Commission said. <\/p>\n

Earlier this year, the SEC said, a supposed market maker called ZM Quant was retained to support trading in a token called NexFundAI. On paper, NexFundAI was a way to invest in early-stage artificial intelligence projects. <\/p>\n

Employees of ZM Quant allegedly counselled the backers of NexFundAI on how to artificially drive up the price of the token before selling tokens to \u201ccash out at the peaks\u201d, federal officials said in an indictment. At one point in May, ZM Quant\u2019s trades amounted to more than 80 per cent of NexFundAI\u2019s trading volumes, according to the SEC. <\/p>\n

But ZM Quant was unaware that NexFundAI was not just another fledgling crypto token with dreams of a lofty valuation: it was a tool of federal law enforcement agents bent on dismantling the alleged pump-and-dump operation. <\/p>\n

NexFundAI traded for only a single day, on May 31, generating $4,600 in artificial trading volume, according to the SEC.<\/p>\n

\u201cWhat we uncovered has resulted in charges against the leadership of four cryptocurrency companies, and four crypto \u2018market makers\u2019 and their employees who are accused of spearheading a sophisticated trading scheme that allegedly bilked honest investors out of millions of dollars,\u201d said Jodi Cohen, an FBI special agent, in a statement. \u201cThe FBI took the unprecedented step of creating its very own cryptocurrency token and company to identify, disrupt and bring these alleged fraudsters to justice.\u201d<\/p>\n

Employees of market-makers Gotbit Consulting, CLS Global FZC and MyTrade MM also face charges, as do those of crypto companies Saitama, Robu Inu, VZZN and Lillian Finance. <\/p>\n

Saitama at one point \u201cboasted a market value of $7.5bn\u201d while its leadership \u201cwas actively manipulating the market for the Saitama token and secretly selling their Saitama tokens for tens of millions in profits\u201d, according to the DOJ.<\/p>\n

Federal law enforcement officials traced Saitama\u2019s alleged campaign of market manipulation back to July 2021, when one Saitama leader sent a private message to another about a plan to \u201ccreate an illusion of massive buys and new holders\u201d that will \u201cincite ppl to buy more\u201d.<\/p>\n

\u201cYep,\u201d replied another Saitama backer, who later sent a GIF<\/a> emblazoned with the words \u201cPump it up\u201d.<\/p>\n

The defendants face a range of charges, including market manipulation, conspiracy to commit money laundering and wire fraud, which can lead to sentences of up to 20 years in prison.<\/p>\n

\u201cWash trading has long been outlawed in the financial markets, and cryptocurrency is no exception,\u201d said acting US attorney Joshua Levy in a statement. \u201cThese are cases where an innovative technology \u2014 cryptocurrency \u2014 met a century-old scheme \u2014 the pump and dump.\u201d<\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Stay informed with free updates Eighteen people and companies face charges for \u201cwidespread fraud and manipulation\u201d after an FBI sting investigation in which authorities created their own cryptocurrency token, federal officials said on Wednesday. The US Department of Justice announced five defendants had pleaded or agreed to plead guilty and another three were arrested in<\/p>\n","protected":false},"author":2,"featured_media":6490,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[206],"tags":[1226,1223,58,1222,401,1225,535,1136,1224],"class_list":{"0":"post-6489","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-financial-crime","8":"tag-alleged","9":"tag-creates","10":"tag-crypto","11":"tag-fbi","12":"tag-fraud","13":"tag-nab","14":"tag-scheme","15":"tag-suspects","16":"tag-token"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/6489","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6489"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/6489\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/6490"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6489"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6489"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6489"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}