ClickCease Fraud Alert: FBI Exposes Cryptocurrency Market Manipulation  - TuxCare

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Alerta de fraude: el FBI destapa la manipulación del mercado de criptomonedas 

por Wajahat Raja

25 de octubre de 2024 - Equipo de expertos TuxCare

As per recent reports, the United States (US) Department of Justice (DoJ) has announced the arrests of multiple individuals involved in cryptocurrency market manipulation. These digital asset manipulation initiatives are being categorized as part of a larger fraud operation. In this article, we’ll dive into the details of the manipulation and learn more about the operation. Let’s begin! 

Cryptocurrency Market Manipulation: FBI Operation 

In an attempt to halt the cryptocurrency market manipulation, the Federal Bureau of Investigation launched Operation Token Mirrors. As part of the operation, the law enforcement agency has gone to the extent of creating its own crypto and a company called NexFundAI.  

Reports claim that NexFundAI was marketed as an entity that would redefine the intersection between artificial intelligence (AI) and finance. Apart from this NexFundAI token had two primary objectives:

  1. Act as a secure store of value. 
  2. Be a medium of promoting positive change in the world of AI. 

As a result of the operation against the cryptocurrency market manipulation, around 18 entities have been caught up in the investigation net. Out of the 18 entities, five have either pleaded or agreed to plead guilty. 

It’s worth mentioning that three individuals have been arrested from varying locations, including the United Kingdom (UK), Portugal, and the state of Texas. Commenting on the entities involved in the cryptocurrency market manipulation, the DoJ stated that: 

“Three market makers — ZM Quant, CLS Global, and MyTrade — along with their employees are charged with allegedly wash trading and/or conspiring to wash trade on behalf of NexFundAI, a cryptocurrency company and token created at the direction of law enforcement as part of the government’s investigation. A fourth market maker, Gotbit, its CEO, and two of its directors are also charged for perpetrating a similar scheme.”

Wash Trading Details 

Those keen on being involved in safe crypto investments and trading must know that wash trading is a cryptocurrency market manipulation tactic. Its implementation entails that an entity will buy and sell the same instruments, creating a bogus impression of market activity. Such a tactic is a feasible option for those with malicious intent

It ensures that there’s no risk involved and the market position of the entity remains unaltered. In the cryptocurrency market manipulation seizure, over $25 million have been confiscated. In addition, multiple trading bots, for around 60 cryptocurrencies, functioning based on wash trading protocols, have been disabled. 

Reports have cited court documents indicating that the defendants are associated with different crypto companies and that market manipulation was carried out to attract new investors and buyers. Details of those involved are provided below:  

Cryptocurrency Market Manipulation Firms Individuals Involved In Market Manipulation 
Gotbit Consulting LLC (Gotbit) Aleksei Andriunin, Fedor Kedrov, Qawi Jalili
ZM Quant Investment LTD (ZM Quant) Riqui Liu, Baijun Ou
CLS Global FZC, LLC (CLS) Andrey Zhorzhes
MyTrade MM Liu Zhou
Saitama LLC (Saitama) Manpreet Kohli, Haroon Mohsini, Nam Tran, Max Hernandez, Russell Armand, Vy Pham
Robo Inu Finance (Robo Inu) N/A
VZZN Michael Thompson
Lillian Finance LLC (Lillian Finance) Bradley Beatty

Conclusión 

The FBI’s Operation Token Mirrors has uncovered significant cryptocurrency market manipulation, with multiple entities and individuals now facing legal consequences. As the investigation unfolds, this case highlights the ongoing risks in the crypto world and the importance of regulatory oversight to ensure market integrity. 

In light of the prevailing online threats, using proactive security measures is now a necessity for staying safe in a digital world. 

The sources for this piece include articles in The Hacker News and The Verge.

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