Security Intelligence
Loading table of contents...
Loading table of contents...
The U.S. Federal Bureau of Investigation (FBI) has revealed that the unprecedented creation of its own cryptocurrency token and company, called NexFundAI or sometimes NextFundAI, has led to the arrest of 18 individuals on digital assets manipulation charges.
The first of its kind operation, codenamed Operation Token Mirrors, began with the creation of the FBI’s NexFundAI cryptocurrency which was promoted on its professional-looking website as the “intersection between finance and artificial intelligence.”
The operation's goal was to track the purchase and sale of the currency in hopes of identifying individuals and companies conducting ‘wash trading’. Wash trading is a practice in which a financial instrument, in this case, cryptocurrency, is rapidly bought and sold to create artificial market activity which usually inflates the instrument’s value. The actor then sells the instrument at an inflated price, making an illegal profit.
Image 1: Nex/NextFundAI's website with new FBI banner
Operation Token Mirrors resulted in charges for four cryptocurrency trading companies, known as market makers, along with their employees. The operation also confiscated $25 million worth of cryptocurrency and has disabled multiple trading bots associated with making wash trades. Five of the 18 individuals arrested have pleaded or agreed to plead guilty.
Source: The Hacker News
Analysis
Operation Token Mirrors is a great example of the FBI’s ingenuity and capability when it comes to hunting down fraudsters who believe the anonymous nature of cryptocurrency will conceal their fraudulent activities.
The fact that five of the arrested individuals have already pleaded, or agreed to plead, guilty is a sign that the operation caught these individuals red-handed and that there is no use fighting their charges in court.
Operation Token Mirror will no doubt have a lasting impact beyond the direct arrests of the 18 individuals, as it will make other financial fraudsters second guess whether the FBI or another law enforcement agency is behind, or has access to, other cryptocurrencies they are planning to wash trade.
