The FBI has revealed that it created a cryptocurrency called NexFundAI as part of an investigation into price manipulation in crypto markets. The token, which is based on the Ethereum blockchain, was developed with the assistance of “cooperating witnesses.” This investigation has resulted in charges being filed by the Securities and Exchange Commission against three “market makers” and nine individuals for allegedly engaging in schemes to boost the prices of certain crypto assets. Additionally, the Department of Justice has charged 18 people and entities for their involvement in ”widespread fraud and manipulation” within crypto markets.
According to prosecutors, the defendants made false claims about their tokens and conducted what are known as “wash trades” to create the illusion of an active trading market. It is alleged that three market makers – ZMQuant, CLS Global, and MyTrade – engaged in wash trading or conspired to do so on behalf of NexFundAI without realizing that it had been created by the FBI.
Jodi Cohen, special agent in charge of the FBI’s Boston division, described this case as a new twist on traditional financial crime. She stated that charges have been brought against four cryptocurrency companies’ leadership along with four crypto market makers and their employees who are accused of orchestrating a sophisticated trading scheme that defrauded honest investors out of millions.
Liu Zhou, a market maker working with MyTrade MM, reportedly boasted to promoters of NexFundAI about his company’s ability to control pump-and-dump schemes and engage in insider trading easily.
Limited trading activity was reported on NexFundAI by an FBI spokesperson; however, no further details were provided. During a press call on Wednesday, Joshua Levy from the US Attorney’s Office for Massachusetts stated that trading on this token had been disabled.
It has been reported that $25 million obtained from fraudulent proceeds will be returned to investors by the Department of Justice.