Feds on Wednesday hit 14 individuals and four crypto companies with criminal charges for market manipulation and “wash trading” in the digital asset industry—the first case of its kind. 

Over $25 million in crypto has been seized in the case, the U.S. Department of Justice (DOJ) said, and cops even created a fake digital token in order to catch alleged criminals in the act of manipulation.

The DOJ announced charges against Gotbit, ZM Quant, CLS Global, and MyTrade. The companies allegedly made wash trades with digital tokens to inflate their prices, attracting new investors in the process. Then, feds alleged on Wednesday, defendants sold their tokens—what is known as a “pump and dump” scheme. 

“These are cases where an innovative technology—cryptocurrency—met a century-old scheme—the pump and dump,” Acting United States Attorney Joshua Levy said in a statement.

He added: “Wash trading has long been outlawed in the financial markets, and cryptocurrency is no exception.”

The DOJ said that the FBI created a token called NexFundAI as part of its investigation, dubbed “Operation Token Mirrors.” It alleged that ZM Quant, CLS Global, a

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Author: Mathew Di Salvo