Scams and deceptions are common in the crypto ecosystem. The US authorities know this, and in an operation in the purest film noir style but in a modern version, the FBI has accused 18 people of carrying out fraudulent operations with cryptocurrencies.
The North American organization launched a cryptocurrency on the market (incognito), called NexFundAI and based on the Ethereum network, to let some of the companies that are dedicated to carrying out this type of fraud use it for these purposes, and indeed, they have fallen several. Mainly, the crypto companies that have been accused used tactics known as “wash trade” and “pump and dump.”
As explained by the Massachusetts Attorney’s Office, these are the “first criminal charges against financial services companies for market manipulation and ‘laundering operations’ in the cryptocurrency industry.”
In a press release, they explain that more than $25 million in cryptocurrencies have been seized, and several trading bots responsible for laundering operations worth millions of dollars have been deactivated for approximately 60 different cryptocurrencies.
Wash trading refers to the execution of transactions that the creator of a cryptocurrency himself or his partners carry out to create a false sense of trading activity. When an investor sees that a cryptocurrency is recording many transactions, they may think that its value will increase in the future, since it is generating interest in the crypto space. Since it is not real users, but the partners themselves (or bots) who make these transactions with no real value, it is considered fraud.
On the other hand, pump and dump is a very well-known tactic by which the company or creator of a cryptocurrency spreads all kinds of false messages, or tries to generate maximum hype around a cryptocurrency only with the aim of selling its part. when it reaches a high value, leaving other investors to lose their funds when the enthusiasm stops.
It is a strategy used in many similar cases within the crypto sphere, whereby people invest money in a digital asset thinking that it will increase in value when in reality there is no reason for it to do so, beyond pure speculation.
Specifically, these are the companies or actors involved in the fraudulent schemes:
- Gotbit
- ZM Quant
- CLS
- MyTrade MM
- Saitama
- Robo Inu
- VZZN
- Lillian Finance
maile
@MaileOnX
🔥Who remembers that Saitama crypto scam that was rampant on Clubhouse? It’s officially a scam.
“Wash trading has long been outlawed in the financial markets, and cryptocurrency is no exception. These are cases where an innovative technology – cryptocurrency – met a century… https://t.co/YNtoE05qd6 https://t.co/LRp7DFpD8f
October 10, 2024 • 22:38
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A lesson for crypto investors
This whole situation leaves some lessons for investors or users of the crypto space. The main one (although it should already be more than assumed by anyone who participates in this sector) is that you have to find out what is really behind a crypto project before deciding to invest in it.
Furthermore, it highlights the fact that trading volume is not always a good indicator of the health or potential of a cryptocurrency, since it can be easily manipulated by bots or human actors.
“The message today is that if you make false statements to mislead investors, that is fraud. Spot. “Our Office will aggressively pursue fraud, including in the cryptocurrency industry,” said Acting U.S. Attorney Joshua Levy.
Although some users have been surprised by this FBI intrusion into an apparently very unregulated sector, the news only shows that, for the competent authorities, frauds in the crypto ecosystem are as punishable as those involving fiat money. Financial crimes are very serious, also in the crypto sector.
