FBI Outsmarts Crypto Scam Masterminds With Fake NexFundAI Token

US market regulators and the FBI have conducted a sting operation by creating a fake token to lure crypto scam offenders

In a bold move, the U.S. Federal Bureau of Investigation has launched criminal charges against multiple crypto firms. The authorities cracked down on Gotbit and ZM Quant for market manipulation and fraud. 

An Undercover Sting Operation like No Other 

The investigation, involving an undercover FBI sting operation, targeted these firms and 12 individuals linked to fraudulent activities. 

The U.S. Securities and Exchange Commission (SEC) filed civil charges against them in tandem. This action spotlights a coordinated effort to clamp down on illegal practices and scams on the rise within the cryptocurrency market.

The FBI agents created a fake cryptocurrency called the NexFundAI Token as part of this investigation. The team used the token to lure fraudsters into offering their illicit market manipulation practices. 

#Fedcoin? well, not THAT Fed Coin – #NexFundAI was a coin created at the direction of the #FBI (yes that FBI) “as part of its undercover investigation of #crypto asset market #manipulation“; #SEC brings 5 cases vs MMs, two involve a FBI created coin! https://t.co/knVktsUS1o

— Drew Hinkes (@propelforward) October 9, 2024

Authorities have described this move as unprecedented. It marks a significant evolution in how law enforcement is tackling crypto-related fraud. 

Using an undercover approach, investigators gained first-hand insights into the mechanics of these deceptive schemes. The FBI gained more insights into fraudsters artificially manipulating trading volumes and prices.

ZM Quant Crypto Scam and the Allegations of Manipulation

ZM Quant, one of the key firms charged, gained popularity for offering market-making services to improve liquidity in crypto markets. However, Baijun Ou, Ruiqi Liu, and two unnamed co-conspirators now face accusations of artificially using these services to inflate various cryptocurrencies’ trading volume and price. 

The firm allegedly used sophisticated techniques, private chatrooms, and messaging apps to solicit investors for their schemes. 

Meanwhile, Gotbit faced charges for artificially inflating the trading volume of the Robo Inu token. The manipulation led to the token reaching a trading volume of $1 million while deceiving investors into thinking it had genuine market value. 

Recently, it BGECrypto reported that losses from crypto scams have topped $2 billion in 2024.

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