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The FBI Built a Fake Crypto Coin to Catch the Pump-and-Dump Crews

Crooks were faking the busy-ness of crypto coins with bots. So the feds built a coin of their own and waited for the crooks to call.

By Caleb, framer & builder, Oklahoma CityPublished About a 5-minute read

No affiliate links. General education, not financial advice. See the disclaimer.

A buddy sent me a YouTube video called "Behind the Scheme: The FBI Created a Fake Crypto Company." I figured it was clickbait. It wasn't. I went and read the actual Justice Department press releases. It's real, and it's one of the best lessons I've seen on why so many little coins shoot up and then crash.

First, two words you need to know

A market maker is supposed to be like the supply yard that always keeps lumber on the shelf. They stand ready to buy and sell a coin so regular folks can trade it without waiting around. That's a legit job.

Wash trading is when somebody buys and sells to themselves over and over. Picture a contractor who sends his own trucks in and out of a job all day so the neighbors think he's slammed with work. Nothing actually got built. It just looks busy. In crypto, bots do this thousands of times, so a coin looks like everybody's trading it.

Why fake it? Because busy coins rank higher on the trading sites, and people buy what looks popular.

The playbook

  1. Launch a new coin and hype it.
  2. Pay a "market maker" to run bots that wash trade it, so the volume looks huge.
  3. Regular folks see the numbers climbing, get FOMO (fear of missing out), and buy in.
  4. The insiders sell into that buying at the high price. The price crashes. The regular folks are left holding the bag.

One of the market makers charged in this case said the quiet part out loud to a would-be client. According to the Justice Department, he said the goal was to find "other buyers from the community, people you don't know about or don't care about" because "we have to make [the other buyers] lose money in order to make profit." Read that twice. That's who's on the other side of a pumped coin.

How the sting worked

The FBI, working out of Boston, created its own crypto company and token called NexFundAI. It ran on the Ethereum blockchain. Then agents went shopping for market makers to pump it.

Three firms, ZM Quant, CLS Global, and MyTrade, are charged with agreeing to wash trade the FBI's fake coin for pay. A fourth firm, Gotbit, plus its CEO and two of its directors, was charged for running the same kind of scheme for other clients from 2018 to 2024.

On October 9, 2024, prosecutors in Massachusetts announced charges against 18 people and companies. That included the leaders of four crypto companies, among them Saitama, a coin that at one point had a market value in the billions. They seized more than $25 million in crypto and shut down trading bots that had been doing wash trades for about 60 different coins.

What happened to them

  • MyTrade: its founder pleaded guilty in October 2024.
  • CLS Global: agreed in January 2025 to plead guilty to two counts tied to wash trading the FBI's coin, and was sentenced in April 2025.
  • Gotbit: founder Aleksei Andriunin was arrested in Portugal in October 2024 and sent to the U.S. in February 2025. He pleaded guilty in March 2025 to wire fraud and conspiracy. In June 2025 he got eight months in prison, which he'd already served while locked up, plus a year of supervised release. Gotbit had to give up about $23 million in seized crypto and shut down for good.
  • The SEC also filed its own civil cases.

Eight months doesn't sound like much. But the bigger win is that the bots got turned off and everybody in that business now knows the "client" might be the FBI.

How to spot a pumped token

  • Brand new coin. A few weeks or months old, with a flashy name. AI, dog names, and "the next 100x" are favorites.
  • Huge volume out of nowhere. If a coin nobody heard of last week is trading millions a day, ask who's doing all that trading.
  • Volume doesn't match holders. Millions in daily trades but only a few hundred or a few thousand wallets holding it? That smells like bots.
  • Paid hype. Influencers, Telegram groups, and "join now before it moons" posts. If somebody's paid to push it, they're not on your side.
  • A few wallets own most of it. If the top 10 wallets hold most of the coins, they can dump on you any time.
  • Hard to sell. If you can buy but can't sell, or the sell fee is crazy, get out of the conversation, not into the coin.
  • Only on tiny exchanges. Listed only on sites you've never heard of.

How I protect myself

  1. Stick to established coins that have been around for years.
  2. Use big, well-known exchanges.
  3. Never buy because the price is jumping. That's exactly what the bots are built to make you do.
  4. If you can't explain what the coin does in one sentence, don't buy it.
  5. Only put in money you can afford to lose. I've lost over $12,000 to scams, so I learned that one the hard way.

On a job, you don't judge a sub by how many trucks are parked out front. You judge them by the work. Same with crypto. Don't trust the noise. Look at what's really there.

For more warning signs, read my scam checklist.

Sources

Not financial advice. I'm a builder, not a broker. This is general education. Do your own homework, and see the disclaimer.