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The Federal Bureau of Investigation has charged 18 individuals and companies with fraud and manipulation following a sting operation involving a fake cryptocurrency token. The operation, dubbed “Operation Token Mirrors,” led to the arrest of three individuals in Texas, the UK, and Portugal.

What Happened: The U.S. Department of Justice has announced that five defendants have either pleaded or agreed to plead guilty. The operation seized over $25 million in cryptocurrency assets, reported the Financial Times on Wednesday.

The U.S. Securities and Exchange Commission (SEC) stated that the scheme involved “on-demand market manipulation” on trading platforms, creating massive artificial trading volumes.

The SEC highlighted that ZM Quant, a supposed market maker, was enlisted to support trading in NexFundAI, a token designed to invest in AI projects. ZM Quant’s employees allegedly advised on inflating the token’s price for profit. Unbeknownst to them, NexFundAI was an FBI tool to dismantle the pump-and-dump operation.

Jodi Cohen, an FBI special agent, stated, “The FBI took the unprecedented step of creating its very own cryptocurrency token and company to identify, disrupt and bring these alleged fraudsters to justice.” Charges include market manipulation and conspiracy to commit money laundering, with potential sentences of up to 20 years.

See Also: If You Invested $1000 in Bitcoin When Rap Legend Nas Sang That He Was ‘Coin-Based, Basically Crypto-Currency Scarface,’ Here’s How Much You’d Have Today

Why It Matters: The FBI’s operation comes amid a backdrop of increasing cryptocurrency fraud. In 2023, Americans lost a staggering $5.6 billion to cryptocurrency-related scams, according to the FBI's 2023 Cryptocurrency Fraud Report. This marks a 45% increase from the previous year, underscoring the growing sophistication of cybercriminals in the digital asset space.

Additionally, the FBI has been vigilant in issuing warnings against various crypto scams, including crypto exchange impersonation scams and unregistered crypto services.

Meanwhile, the king crypto Bitcoin BTC/USD is currently trading at $63,126.50, up 0.45% for the day. Year to date, Bitcoin has surged 42.81%, according to data from Benzinga Pro.

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