A massive fraud and market manipulation operation was carried out in the altcoin market by the US Department of Justice (DOJ), Securities and Exchange Commission (SEC) and Federal Bureau of Investigation (FBI). Within the scope of the operation, crypto companies such as Gotbit Consulting, ZM Quant Investment and CLS Global and 18 people affiliated with these companies were charged. These people are accused of using a tactic called “wash trading” to raise cryptocurrency prices by making misleading transactions in the market.
Big altcoin trap from FBI: Fake token NexFundAI
To expose this corruption network, the FBI created NexFundAI, a fake token on the Ethereum network. This token was used to trap criminals. FBI agents communicated with these criminals as customers, showing that they were willing to be defrauded. Thanks to this “sting” operation, many people were caught, and some of them boasted that they had manipulated cryptocurrency prices. This trap operation carried out with NexFundAI stands out as a strategy that has never been seen before in the crypto world. Criminals attempted to attract new investors by artificially increasing the price of the token, making huge profits in the process at the expense of investors. This operation is seen as a big step against “pump and dump” scams that are becoming increasingly common in the crypto world.
Gotbit Consulting, which was among the accused companies, claimed that it sold a token called $WATER in order to reduce its price to a fair level. However, investigations revealed that Gotbit sold much more tokens than the amount it purchased, refuting the company’s previous statements. Gotbit created fake trading volumes using bots, which led investors to think that demand for the token was high. With these methods, the defendants earned millions of dollars. The international dimensions of such frauds have also been revealed. The criminals included people from Russia and Portugal, and some chose to plead guilty to the charges and cooperate with prosecutors.
The case sets an international precedent
This case is the first criminal case filed by the US Department of Justice against market manipulation in the crypto market. This is considered a major victory in the fight against corruption in the growing field of crypto assets. The cooperation between the FBI, SEC, and DOJ and the success of using a fake token raises important questions about future law enforcement strategies against crypto scams. Crypto fraud has become a rapidly growing threat with technology. Regulatory authorities in the USA are forced to take more intelligent and effective steps in the face of this increasing threat. This operation, carried out with NexFundAI, stands out as proof that government institutions can take smarter and strategic steps against frauds in the crypto world.
These scams often involve manipulating altcoin prices to artificially inflate their market value. Scammers sell large amounts of tokens to the market, attracting investors by raising prices, and then lowering prices, causing losses to investors. With this method, Gotbit Consulting and other companies caused investors to lose billions of dollars. With this operation of the FBI, even large projects such as Saitama token became the target of such frauds. The market value of the Saitama token once reached $7.5 billion, but after the collapse of this fraud network, this value dropped rapidly.
During this FBI operation, bots used by fraudsters to manipulate the market were also seized. These bots create misleading activity in the crypto market by creating fake trading volumes and allow fraudsters to profit at the expense of investors. The total value of the seized crypto assets reached $25 million, and these individuals face up to 20 years in prison for wire fraud and crypto market manipulation. While $679 million was reported to be lost due to crypto fraud worldwide in the first half of 2024, this operation by the FBI is considered a major victory against corruption in the crypto asset world.
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