More crypto news, not further speculation as to who Bitcoin creator "Satoshi Nakamoto" might or might not be, but about the United States Federal Bureau of Investigation catching crypto crooks in a novel fashion.
In what the US Department of Justice called a first of its kind investigation, the FBI created a cryptocurrency on the Ethereum blockchain, called NexFundAI.
With the law enforcement cryptocurrency as lure, the investigation was a success. Charges of widespread fraud and manipulation have been laid against eighteen individuals and financial services entities, the DoJ said.
The defendants who created cryptocurrency companies made false statements about their tokens, and executed sham or "wash" trades to make it appear as there was ongoing activity so that the virtual coins seemed like good investments.
"Three market makers — ZM Quant, CLS Global and MyTrade — along with their employees are charged with allegedly wash trading and/or conspiring to wash trade on behalf of NexFundAI, a cryptocurrency company and token created at the direction of law enforcement as part of the government’s investigation. A fourth market maker, Gotbit, its CEO, and two of its directors are also charged for perpetrating a similar scheme," the DoJ said.
The investigation goes back to 2018, when Gotbit's three Russians, Aleksei Andriunin, Fedor Kedorov and Qawi Jalili were first found to be engaging in wash trading. Other accused of fraud include UK/Hong Kong residents Riqui Liu and Baijun Ou of ZM Quant, Andrey Zhorzhes of the UAE (CLS Global) Li Zhou of China and Canada (MyTrade MM), and Briton Manpreet Kohli who worked with Americans Haroon Mohsini, Nam Tran, Max Hernandez, Russell Armand and Vy Pham at Saitama.
Americans Michael Thompson of VZZN and Bradley Beatty of Lillian Finance have also been charged, with the former person pleading guilty to market manipulation.
All in all, millions of dollars shifted hands fraudulently, the authorities allege. If found guilty for market manipulation and other fraud, the people involved face hefty prison sentences of up to 20 years behind bars, and big fines.
Bizarrely, the NexFundAI coin is still trading, although the "market capitalisation" seems to have dropped from US$177,000 to US$30,000 now.
8 Comments
Really didn't think I'd see Pepe the frog on this site.
One of the more interesting crypto scams I've seen recently was somebody who hacked the official McDonalds Instagram and then posted a fake McDonalds related token called $GRIMACE (the big purple guy).
$700k in Solana later and the scammer was kind enough to post a message to the Instagram page they had hacked informing everybody of the 'rug pull'
The Grimace character was really popular in the US and they've taken it to Japan.
The SEC doesn't bother going after crypto scams like this. Size of prize is not big enough and they feel it's easier to shut down the exchanges and start a jihad against defi. I kinda agree with their approach but they will ultimately fail. The financial agency that really has their act together on regulatory framework is the Japan Financial Services Agency (aka FSA).
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