CRYPTO BUST – The U.S. Department of Justice (DoJ) has announced arrests and charges against multiple individuals and entities involved in digital asset market manipulation as part of a large-scale fraud investigation. Spearheaded by the FBI, Operation Token Mirrors involved creating a fake cryptocurrency token and company called NexFundAI to uncover fraudulent activities. NexFundAI, marketed as merging finance and artificial intelligence, aimed to create a secure cryptocurrency while driving positive change in the AI sector.
Three market makers – ZM Quant, CLS Global, and MyTrade – along with their employees, are charged with wash trading on behalf of NexFundAI. Additionally, Gotbit, its CEO, and two directors face similar charges. A total of 18 people and entities are implicated in the investigation, with five defendants having already pleaded guilty or agreed to plead guilty. Arrests have been made in Texas, the U.K., and Portugal.
Furthermore, authorities confiscated over $25 million in cryptocurrency and disabled several trading bots responsible for wash trading in about 60 different cryptocurrencies. Court documents reveal that the accused manipulated their own tokens to create artificial market activity, making them appear as good investments to attract new buyers. This pump-and-dump scheme allowed them to sell the tokens at inflated prices, profiting illicitly.
The defendants charged include Aleksei Andriunin, Fedor Kedrov, Qawi Jalili, and others from Gotbit, ZM Quant, CLS Global, MyTrade, Saitama, Robo Inu Finance, VZZN, and Lillian Finance. These arrests and charges highlight the exploitation of retail investors by institutional actors in the cryptocurrency markets. Sanjay Wadhwa, SEC’s deputy director of enforcement, stressed the importance of investor vigilance against fraudulent promises of profits in the crypto markets.
Ultimately, these enforcement actions underscore the importance of vigilance when it comes to proverbial “dangling keys” in the tech and finance space. These days, people will employ buzzwords like “AI” and “Web3” to gravitate people who wish to be early adopters. Combine that with the sometimes-seedy world of cryptocurrency, and you have a hotbed for scams and illicit activity. The collaboration between the DoJ, FBI, and SEC serves as a warning to those who attempting to manipulate digital asset markets through fraudulent schemes, as well as potential victims.
Information and images courtesy of thehackernews.com. Want to read more about how to keep yourself safe from people selling get-rich-quick schemes? Here’s a link to our site.