The FBI Secretly Created a Coin To Investigate Crypto Pump-and-Dump Schemes (theverge.com) 42
The FBI created a cryptocurrency as part of an investigation into price manipulation in crypto markets, the government revealed on Wednesday. From a report: The FBI's Ethereum-based token, NexFundAI, was created with the help of "cooperating witnesses." As a result of the investigation, the Securities and Exchange Commission charged three "market makers" and nine people for allegedly engaging in schemes to boost the prices of certain crypto assets. The Department of Justice charged 18 people and entities for "widespread fraud and manipulation" in crypto markets.
The defendants allegedly made false claims about their tokens and executed so-called "wash trades" to create the impression of an active trading market, prosecutors claim. The three market makers -- ZMQuant, CLS Global, and MyTrade -- allegedly wash traded or conspired to wash trade on behalf of NexFundAI, an Ethereum-based token they didn't realize was created by the FBI.
"What the FBI uncovered in this case is essentially a new twist to old-school financial crime," Jodi Cohen, the special agent in charge of the FBI's Boston division, said in a statement. "What we uncovered has resulted in charges against the leadership of four cryptocurrency companies, and four crypto 'market makers' and their employees who are accused of spearheading a sophisticated trading scheme that allegedly bilked honest investors out of millions of dollars."
The defendants allegedly made false claims about their tokens and executed so-called "wash trades" to create the impression of an active trading market, prosecutors claim. The three market makers -- ZMQuant, CLS Global, and MyTrade -- allegedly wash traded or conspired to wash trade on behalf of NexFundAI, an Ethereum-based token they didn't realize was created by the FBI.
"What the FBI uncovered in this case is essentially a new twist to old-school financial crime," Jodi Cohen, the special agent in charge of the FBI's Boston division, said in a statement. "What we uncovered has resulted in charges against the leadership of four cryptocurrency companies, and four crypto 'market makers' and their employees who are accused of spearheading a sophisticated trading scheme that allegedly bilked honest investors out of millions of dollars."
Re: (Score:3)
FBI-coin, IT CAN ONLY GO UP! buy buy buy! LOL. (Or don't.)
Go ahead and spring for that "water wet" tattoo. (Score:2)
Oh, really? (Score:4, Interesting)
I've sat through about 80 hours of crypto "education" and it still hasn't changed my opinion of crypto. I fully admit I could be wrong with my opinion but I still do not see any way crypto is anything but exchanging one set of regulated, somewhat accountable insiders for an unregulated, unaccountable, even unknown set of others in a monetary system beset with fraud, crooks, conspiracy theorists, get poor quick schemes and no few wackos.
It's the answer to a mathematical question no one asked.
Re: (Score:2)
That's why "DeFi" means Deregulated Finance
I'm aware of that. Covered in the first, oh, I don't know, 50 yoctoseconds of the "education". The point you seem to miss is with that "deregulation" comes the frauds, crooks, smoke and mirror dancers. That may seem to be a positive to some. To me, it starts the song "The Merry Go Round Broke Down" [youtu.be] and Daffy Duck stepping up with a straw hat, a cane, and a carnival barker's promises of "amazing profits!"
Re: (Score:2)
whoooooosh!
Yes, I sure did miss the fraud. I've never bought any crypto. If one wishes to make a point, they usually start by articulating one. My point is that to date I've seen no compelling evidence that crypto is not, for the most part, fairly inexplicably popular while also having a great proclivity for fraud and abuse.
NexFundAI? (Score:2)
Well, it's good that they put AI in the name. But, with cryptocurrency, shouldn't they also have "blockchain" in there?
"NexBlockFundAI?"
Just ban it already. (Score:2, Insightful)
Re: (Score:2)
Re: Just ban it already. (Score:2)
Tell me you donâ(TM)t understand blockchain without telling me you donâ(TM)t understand blockchain
Hint: not all consensus systems are like Bitcoinâ(TM)s
Re: (Score:2)
2. Consumes physical resources that...
3. Pollute the physical environment and thereby limit future options.
Crypto literally trades something for nothing. And since the only reason anybody does that at scale is completely nefarious, just ban it already.
In the time of chimpanzees I was a monkey (Score:2)
Bummed I wasn't smart enough to dump all my funds into the various crypto-ponzi schemes of the last 10 years. I'm such a looser.
Re: (Score:3)
Re: (Score:2)
If you wouldn't, then I'm sad for you.
Re: (Score:2)
If I say nothing, then you've had the last word, and you're wrong, but it's not like you'd ever cop to it.
It's pathetic, really. I'm sorry I made you look stupid sometime in the past. Does trolling as AC make you feel better about it?
Re: (Score:2)
Worse. I think most losers at least know how to spell loser.
I think he's talking about his anus. Or going by his id, goatse.
Re: (Score:2)
I wonder what the cross-section is between knowing of goatse, and knowing which homophone stands for someone who loses, and which stands for something that's looser than something else.
No legitimate use case (Score:5, Insightful)
Re: (Score:2)
I think a better analog for Satoshi would be Oppenheimer. I do wonder, if Satoshi is still alive, if he likewise believes his creation to be abhorrent.
Is it just me ... (Score:3)
Is it just me, or do others have the same perception ...
that any news about crypto is always about the negative, the fraudulent, and the criminal uses and abuses?
I can't recall a story that is uplifting or motivating or inspirational about crypto doing something good for someone or collectively for society, aside from how some individuals cashed out to win the crypto "investment" lottery.
I know there are people who believe it has merit, but they seem to be the minority.
People on Slashdot seem to have varying degrees of experience or knowledge about crypto, from hardly any (like me), to very knowledgeable, to drank-the KoolAid. But regardless their knowledge of this specific subject, people on Slashdot are mostly educated, employed, and technically sophisticated - so they have the experiences, smarts, and wisdom of life. It seems to me that the preponderance of opinions on this site are skeptical at best about crypto. That should be the bellwether about the legitimacy of crypto.
Re: (Score:2)
```
It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a âdismal science.â(TM) But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.
Murray N. Rothbard
```
The same can be said about crypto.
Really, if one can't speak fluently about Merkle Trees, the Byzantine Generals Problem, zk-snarks, or distributed hash tables, there's not even much of a di
Re:Is it just me ... (Score:4, Interesting)
The same can be said about crypto.
I'd tend to disagree with that. It's been 12+ years since all the crypto stuff has come out, and we've yet to really see anything useful come out of it. And the current nay-sayers aren't like a bunch of boomers in the 80s thinking the computer revolution was just a fad and that it "would go nowhere because no one wants to stare at screens all day long"; they're nay-sayers because they've been waiting this long, and they've yet to really see anything useful come out of crypto[currencies].
So while it's a cool experiment, as usual with things that have little to no safeguards, it's turned into something that's been only really useful to those that would abuse that lack of safeguards, be it ransomware criminals, or a new digital variant of Ponzi-like scheme crooks passing themselves off as the new finance system leaders.
Re: (Score:2)
Really, if one can't speak fluently about Merkle Trees, the Byzantine Generals Problem, zk-snarks, or distributed hash tables, there's not even much of a discussion to be had
Completely untrue, you can have a perfectly useful discussion about crypto without understanding ANY of that stuff. What you DO need to understand are relatively simple concepts like the basic functionality of Blockchain tech: distributed public ledgers and a voting mechanism for accepting transactions. You just need to understand things like:
1) WHY it uses distributed ledgers and voting: lack of trust.
2) the COSTS of those things: distributed ledgers are horrifically inefficient, as are some of the voting
Re: Is it just me ... (Score:2)
Slashdot has had a hard-on against crypto and blockchain since day 1
They missed the iPod and theyâ(TM)re just mad
Blockchain and bitcoin may not actually be successful, but theyâ(TM)ve already changed the world. People now think seriously about what money actually is and why they can have digital money that acts like cash.
Re: (Score:2)
People now think seriously about what money actually is and why they can have digital money that acts like cash.
"[cryptocurrency] that acts like cash"?!?
They can't even do the most basic things cash does. For example, can I:
1. go to any ATM and 'cash out' some Bitcoin (let alone any other cryptocurrencies)? No.
2. go anywhere and pay for stuff with Bitcoin? No.
3. walk up to anyone, say "I'm paying it forward - here's a few Satoshis/Ethereum/Dogecoin/Etc., have a coffee on me." and have them actually understand what I'm talking about? No.
All these bros have been promising these glamorous things about cryptocurren
It's just rent seeking. (Score:2)
Crypto schemes are just rent seeking by those who can't afford to buy real estate. The idea is that the platform makes money from the trading activity, not whether particular "investors" made or lost money. But, in order to keep trading activity high, the platforms must sell the notion that this digital token is some sort of investment, without explicitly stating as much. This, in turn attracts the greedy sociopathic types who want something for nothing.
I think the reason why these platforms have exis
This is entrapment and it is illegal (Score:1)
If someone is already breaking the law and you lure them, that is enticement but if you create an opportunity and tempt them to break the law (such as by creating this cryptocurrency) then it is entrapment and is itself unlawful.
Re: (Score:2)
That's what you get for connecting to the SSID "FBI Surveillance Van"
Re: (Score:2)
Liu Zhou, a “market maker” working with MyTrade MM, allegedly told promoters of NexFundAI that MyTrade MM was better than its competitors because they “control the pump and dump” allowing them to “do inside trading easily.”
IMHO this doesn't look like entrapment, as it lured already fraudulent traders.
Re: (Score:2)
IMHO this doesn't look like entrapment, as it lured already fraudulent traders.
Already fraudulent, or 'pre-crime' a la Minority Report?
Re: (Score:1)
Allegedly fraudulent, it isn't enough that people allegedly be criminals because being a criminal 5mins ago doesn't mean you'd ever do it again or would have if you hadn't been tempted. The cops [or private parties also] have to know the individual is already in the active commission of a crime to turn entrapment into enticement. Generally speaking you need to find an instance where people are already breaking the law and you are enticing them to bigger charges vs enticing them to break the law. For instanc