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Operation Token Mirrors, an FBI sting operation, exposed wash trading by three market makers, ZM Quant, CLS Global, and MyTrade, using a fictitious cryptocurrency project named NexFundAI. By examining on-chain data, the blockchain research company Kaiko validated the FBI's conclusions and exposed the scope of the tampering. In May 2024, the FBI developed NexFundAI and published it on Uniswap, where market makers generated the appearance of trading activity using hundreds of wallets and bots. Kaiko discovered that the companies were balancing transactions to fraudulently boost volume since the purchasing and selling volumes were symmetrical.
According to Kaiko, it discovered the trading patterns these companies and people developed after analyzing the on-chain data for the NexFundAI coin. According to the blockchain analysis organization, its results "confirm information that the FBI discovered through its undercover sting operation." Only Uniswap offered the NexFundAI cryptocurrency. Kaiko also looked at the secondary market data. The company's calculation of the total volume of NexFundAI in this market revealed symmetry between the purchasing and selling quantities, indicating widespread manipulation.
Kaiko said that the symmetry in buying and selling volumes indicated that market-making firms were "offsetting a total amount across all wallets engaged in wash trading on this market each day."
The FBI established the NexFundAI cryptocurrency, presenting it as a credible initiative to recruit market manipulators. According to a release, the agency charged eighteen persons on October 9. Acting US Attorney Joshua Levy warned fraudsters that making false representations to deceive investors constitutes fraud and that the US Attorney's Office would "aggressively pursue fraud."
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A web 3 girl living in a web 2 world.
