Why the FBI Created Their Own Cryptocurrency

Not all cryptocurrency tokens are legitimate. Many digital investors understand that, but at least one of the fake ones is made by the Federal Bureau of Investigation.

The FBI created a digital currency for the sole reason of catching people in the act of fraud. Their fake token has already helped them catch fraudsters in three countries. They used the currency NexFundAI, which is an Ethereum-based token. The Department of Justice announced on Wednesday that that the coin was used to flush out fraudsters. They have already charged 18 individuals and arrested three.

The FBI is watching for fraud that they say is already widespread, and they are looking for ways to slow it down. By setting the bait with an appealing new crypto, they were able to snare a few with their web. As the news comes out, it may spread enough to deter future fraudsters from using digital tokens illegally.

On the Lookout for Several Kinds of Illegal Activity

This kind of activity they were specifically looking for is called wash trading, where the fraudsters will boost trade volume on a particular asset to make it look more active and then use that to take advantage of people who do not know much about investing digitally. The same fraudsters may also engage in a pump and dump scheme, where they artificially inflate the value of a crypto and then back out all at once and sell off their coins, causing the price to drop quickly and dramatically.

These schemes, according to the US Securities and Exchange Commission, are designed to lure investors in with the promise of huge profits in a short period of time. By creating false signals and making outrageous claims that are hard to disprove, the scammers can take advantage of people who invest their money with them. By getting other people to invest in the same coin, the scammers can see their investments increase and then take their money out when they have made enough profit, leaving their victims high and dry.

Even companies are getting involved in the scheme, creating false documents to go with their coins and not revealing how they are manipulating the market for their own profit. They are engaging in a form of insider trading, which is exactly what Saitama did with its token, as they made tens of millions in profits and left their investors with massive losses.  

The FBI has accused several individuals of wash trading, and they were able to gather information on the criminals the entire time they were trading, making it easy to build their cases. The FBI arrested individuals in Portugal, the UK, and in Texas.