The United States Federal Bureau of Investigation used a fake cryptocurrency to catch alleged fraudsters engaging in market manipulation, marking the first known instance of the agency creating a cryptocurrency as part of its investigations.
How the FBI Created a Fake Cryptocurrency
According to an October 7 indictment in Massachusetts Federal District Court, the coin called 'NexFundAI (NEXF)' was presented as a crypto security claiming to represent shares in an artificial intelligence-related fund. The FBI informed scammers that it sought help to manipulate the token's trading volume, misleading investors about its popularity.
Investigation and Arrests
The scammers offered to aid in the fraud, and the agency used the gathered evidence to secure indictments. This marks the first time the FBI admitted creating a cryptocurrency during investigations. The indictment also revealed that in July 2024, the FBI discovered MyTrade MM was offering to guarantee minimum and maximum volumes to token issuers. The FBI arrested Liu Zhou and two conspirators on charges of conspiracy to commit market manipulation and wire fraud.
Controversies Surrounding NexFundAI
Some crypto users speculated the token named in the indictment might be located at an Ethereum address containing the BE54c token. Analytical firms and some network users expressed their opinions on the token's identity on social media. However, no direct connections between this token and the LBank platform have been found, raising further questions.
The FBI's usage of fake cryptocurrency in operations to catch fraudsters highlights increased scrutiny on market manipulation in the crypto space. Nonetheless, the uncertainty surrounding token identities continues to spark debate and necessitates further investigation.
