Justice Department Seizes $25 Million in FBI Crypto Sting
Last Wednesday, U.S. law enforcement unveiled the results of an operation targeting cryptocurrency fraudsters. The investigation, led by the FBI, uncovered a sophisticated scheme to manipulate digital asset prices.
This operation was far from ordinary—it had a unique twist. The FBI created its own token on the Ethereum blockchain, called NexFundAI. Agents, with the support of “cooperating witnesses,” developed the cryptocurrency to infiltrate criminal networks and gather indisputable evidence of illegal activities.
As a result of the investigation, the U.S. Securities and Exchange Commission (SEC) filed charges against three market makers and nine individuals. They are accused of artificially inflating the prices of specific crypto assets. Simultaneously, the U.S. Department of Justice charged 18 individuals and organizations with “widespread fraud and manipulation” in cryptocurrency markets.
According to investigators, the accused spread misinformation about their tokens and conducted so-called wash trades—fictitious transactions between affiliated parties. The goal of these manipulations was simple: to create the illusion of active trading. Three market-making firms—ZMQuant, CLS Global, and MyTrade—were allegedly involved in these operations with the NexFundAI token, unaware of the FBI’s involvement in its creation.
Jodi Cohen, Special Agent in Charge of the FBI’s Boston office, described the uncovered scheme as “a new twist to old-school financial crime.” She noted that the suspects managed to orchestrate an extremely complex trading scheme that, according to the investigation, defrauded honest investors of millions of dollars.
Of particular note is the case of Liu Zhou, a market maker working with MyTrade MM. He allegedly boasted to NexFundAI promoters that his company surpassed competitors because they “control the pump and dump,” allowing them to easily execute insider trades.
An FBI spokesperson informed CoinDesk that trading activity involving the token was limited but declined to provide further comment. Joshua Levy, Acting U.S. Attorney for the District of Massachusetts, announced at a Wednesday press conference that trading in the token had been suspended. According to available information, the Department of Justice has seized $25 million in illicit gains, which they now plan to return to defrauded investors.
