The U.S. Department of Justice (DoJ) has revealed the apprehension and indictment of multiple individuals and organizations allegedly involved in manipulating digital asset markets as part of a large-scale fraudulent scheme.

This law enforcement initiative, known as Operation Token Mirrors, stems from the U.S. Federal Bureau of Investigation (FBI) taking an extraordinary measure by developing its own cryptocurrency token and company named NexFundAI.

According to details on the NexFundAI website, the venture was pitched as a revolutionary intersection of finance and artificial intelligence, claiming its goal was to establish a cryptocurrency token that would not only function as a secure store of value but also spur positive change in the realm of AI.

“Three market makers — ZM Quant, CLS Global, and MyTrade — and their personnel are charged with allegedly engaging in wash trading and/or conspiring to conduct similar activities on behalf of NexFundAI, a cryptocurrency firm and token established at the direction of law enforcement as part of the government’s investigation,” the DoJ stated.

“Moreover, a fourth market maker, Gotbit, alongside its CEO and two directors, faces similar charges related to this fraudulent scheme.”

In total, 18 individuals and organizations are implicated in the investigation, with five defendants having either admitted their guilt or pledged to do so. Additionally, three other defendants have been detained in the United States, the United Kingdom, and Portugal.

Law enforcement has seized over $25 million in cryptocurrency, and numerous trading bots associated with wash trading—an illegal practice that involves buying and selling the same financial instruments to artificially inflate market activity—across approximately 60 different cryptocurrencies have been shut down.

Prosecutors allege that the defendants conducted fake trades using their tokens to create the illusion of sound investments, effectively luring new investors while artificially inflating the tokens’ trading values.

These individuals subsequently sold their tokens at the inflated prices, engaging in a fraudulent practice known as a pump-and-dump scheme, to illicitly profit from their criminal actions.

The individuals and cryptocurrency firms charged include –

• Aleksei Andriunin, Fedor Kedrov, Qawi Jalili, Gotbit Consulting LLC (Gotbit)
• Riqui Liu, Baijun Ou, ZM Quant Investment LTD (ZM Quant)
• Andrey Zhorzhes, CLS Global FZC, LLC (CLS)
• Liu Zhou, MyTrade MM
• Manpreet Kohli, Haroon Mohsini, Nam Tran, Max Hernandez, Russell Armand, Vy Pham, Saitama LLC (Saitama)
• Robo Inu Finance (Robo Inu)
• Michael Thompson, VZZN, and
• Bradley Beatty, Lillian Finance LLC (Lillian Finance)

“Today’s enforcement actions serve as a reminder that retail investors are often preyed upon by fraudulent activities orchestrated by institutional players in the cryptocurrency market,” stated Sanjay Wadhwa, deputy director of the SEC’s Division of Enforcement.

“With alleged promoters and self-proclaimed market makers colluding to mislead the investing public with false profit promises, it is crucial for investors to recognize that the market may not be in their favor.”