The FBI charged 18 individuals and firms for inflating token prices through illegal wash trading tactics.
Over $25 million in crypto was seized as the FBI uncovered widespread market manipulation using NexFundAI.
Four major crypto firms are accused of deceiving investors with false claims and pump-and-dump schemes.
The FBI has charged 18 individuals and businesses with their involvement in a major cryptocurrency fraud operation. As part of the inquiry, the FBI created its own cryptocurrency, NexFundAI, to track down those implicated in market manipulation.
FBI Uncovers Crypto Token Fraud
This led to indictments against Gotbit, ZM Quant, CLS Global, and MyTrade. They are accused of defrauding investors by increasing token prices using illicit techniques.
https://twitter.com/WatcherGuru/status/1844122090619981899
The accused firms are suspected of inflating the value of more than 60 tokens, including the Saitama Token, which once had a market worth of $7.5 billion. These companies allegedly made false claims concerning the tokens and used different deceptive tactics to defraud investors. After inflating token values, they would sell them at higher prices, leaving investors with losses in a pump and dump scheme.
How the Fraud Worked
The FBI discovered that the companies engaged in a practice known as wash trading. This is when a firm buys and sells the same token to make it appear as if there is great demand. The companies used companies such as ZM Quant and Gotbit to carry out these fake trades.
They used many wallets to conceal their actual activities, making the tokens appear more popular than they were. As a result, investors believed the tokens were valuable and bought in.
So far, authorities have seized more than $25 million in cryptocurrencies. They have also shut down trading bots responsible for millions of dollars in illegal deals. Some of the defendants have already pled guilty, while others have been detained in the United States, the United Kingdom, and Portugal.
Legal Outcome
Assistant US Attorney Joshua Levy emphasized that wash trading, which is illegal in traditional markets, is equally unlawful in the cryptocurrency space.
The defendants face charges of market manipulation and wire fraud, which may result in prison sentences of up to 20 years. The case serves as a reminder for investors to exercise caution while dealing with cryptocurrency.
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