FBI uses undercover token to bring down fraudsters
Our resident expert weighs in on the agency's use of crypto to fight crime
Operating in secret, the FBI started its own token to lure in firms suspected of artificially inflating volume and prices for substantial profit.
This token seems to have been created solely to find and bring down market manipulators that are indulging in fraud, illegal market manipulation, and wash trading.
FBI just entered the crypto game for real
— Moxas (@MoxasNFT) October 9, 2024
Market makers CLS Global, Gotbit, MyTrade, and ZM quant as well as 18 individuals were found to be inflating prices when the FBI used their “services”.
They were accused of making fraudulent statements about the tokens and using methods that were very far from “by the book” when it comes to market making.
The crypto community was shocked by the FBI making an appearance in their world, with many posts on X made by notable influencer accounts. Some of which took a humorous take, while others were more serious.
Wow, this case get even more insane
— db (@tier10k) October 9, 2024
The FBI created their own coin called "The NexFundAI Token" and enlisted the services of the firms indicted to catch them
“The FBI took the unprecedented step of creating its very own cryptocurrency token and company to identify, disrupt, and…
Opinions are mixed, with some saying that the FBI doing this is “fraud against itself”.
Personally, I find it interesting that they took this route as these kinds of activities are becoming more common.
Acting United States Attorney Joshua Levy weighed in on the story, saying, "This investigation, the first of its kind, identified numerous fraudsters in the cryptocurrency industry. Wash trading has long been outlawed in the financial markets and cryptocurrency is no exception.”
It seems like the FBI wants you, the individual, to reach out if they see any potential fraud or manipulation that could cause price action of certain tokens to either inflate or deflate very fast.
Artificially pumping and dumping tokens has become almost a norm in the memecoin world - everybody wants to make profits off each other. Trading has been and always will be a zero-sum game.
As long as certain trading environments are openly allowing manipulation, it will never be a fair game. And that being said, maybe it never will be, especially because of the anonymous nature crypto represents and the ability to shift through hundreds of wallet addresses at once.
It’s very interesting to see the FBI enter the space with a bang like this, really pinning down these entities and individuals, pushing them to give up their market manipulation acts.
But, how far will this go? We won’t know until more of these experiments are carried out - and, in my opinion, more will be carried out.
