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The FBI has charged eight companies for operating an alleged pump-and-dump scheme after creating a fake crypto token, NexFundAI, as part of an undercover sting. Crypto companies Saitama, Robo Inu, VZZN and Lilian Finance, and market makers Gotbit, ZM Quant, CLS Global and MyTradeMM were all accused of working together to manipulate the prices of over 60 low cap coins. Suits against these companies were filed on Oct. 9 by the US Securities and Exchange Commission ( SEC ). FBI Launches NexFundAI After SEC’s Saitama Tip Off The FBI received a tip off from the SEC that Saitama was engaging in market manipulation to increase its token’s price and make investors believe that there was interest in the project. Eventually, the investigation into the project led to the launch of NexFundAI, a fake token created by the FBI to observe how these on-demand market makers operated. The fake crypto only traded for 24 hours on May 31. During this period, it generated $4,600 in artific...

Caroline Ellison, the former CEO of Alameda Research, is set to be sentenced by a Manhattan federal court tomorrow. Ellison has previously pled guilty to conspiring to defraud FTX customers alongside her ex-romantic partner and boss Sam Bankman-Fried (SBF). Bankman-Fried was sentenced in April to 25 years in prison. Now 29 years old, Ellison has pleaded guilty to two counts of conspiracy to commit wire fraud, each with a maximum prison sentence of 20 years; two counts of wire fraud , each with a maximum sentence of 20 years; one count of conspiracy to commit money laundering with a maximum sentence of 20 years; one count of conspiracy to commit commodities fraud with a maximum sentence of five years; and one count of conspiracy to commit securities fraud with a maximum sentence of five years. Despite the severity of her crimes and the staggering tally of maximum sentences, practical guidelines and her extensive cooperation with authorities mean that Ellison might not actually s...

On August 29, 2024, U.S. District Judge Alvin Hellerstein dismissed a significant lawsuit against Elon Musk and his company, Tesla , which alleged market manipulation of Dogecoin (DOGE) . The lawsuit, initiated by a group of disgruntled investors in June 2022, claimed that Musk and Tesla artificially inflated the cryptocurrency’s price, resulting in a staggering $258 billion in damages. The court ruling dismissed these claims, stating they were based on non-factual statements. Court’s Decision Judge Hellerstein’s ruling characterised Musk’s statements about Dogecoin as “aspirational and puffery” rather than actionable claims. In his decision, Hellerstein emphasised that “no reasonable investor could rely upon” Musk’s social media posts or public declarations as a basis for making investment decisions. The judge specifically cited Musk’s assertions about becoming the “official CEO of Dogecoin” and placing a “literal Dogecoin” on a SpaceX rocket as examples...

While Madoff has remained the top household name for financial fraud for the past 16 years, it may finally be time to anoint a new fraud king: the former head of Evergrande, Hui Ka Yan. Evergrande collapsed in 2021 after three years of being the largest and most valuable real estate company in the world. The success of the company also briefly made Hui the wealthiest individual in China. But as the Chinese real estate market began to falter, the books for Evergrande looked more and more cooked, and by 2023, the company was bankrupt and facing liquidation. Read more: A year on from the US regional banking crisis, what’s changed? Inflation-Adjusted Fraud means Madoff Keeps Crown While the $78 billion fraud claim being leveled against Evergrande and Hui Ka Yan is significantly larger than the $65 billion fraud that Madoff accomplished over decades, it is actually a much smaller amount when adjusted for inflation.  In this case, after the adjustment, Madoff’s fraud would am...

A London builder who fraud ulently applied for a £50,000 ($62,000) Covid-19 loan before losing it all in a crypto investment Scam has been sentenced to almost two years in prison. As announced by the UK ’s Insolvency Service, 43-year-old L UK asz Nowak successfully applied for a £50,000 ($63,000) Bounce Back loan in October 2020, claiming his business had made £205,000 ($258,000) in the previous tax year. However, Nowak had actually turned over just £20,000 ($25,000). The Bounce Back scheme allows small and medium-sized businesses to borrow between £2,000 ($2,500) and up to 25% of their turnover. Rather than spending the loan on financially supporting his business as intended, today’s press release revealed how Nowak chose to invest the funds into crypto via a third-party broker . However, the broker in question stole his funds, forcing him to declare bankruptcy in July 2021. TikTok ‘guru’ launders COVID loans with crypto, spoils girlfriend Read more: Hac...

Following the $4.3 billion fine by the U.S. Department of Justice (DoJ), Binance’s outflow has surpassed the $1 billion mark over the past week. According to data provided by DeFi Llama, Binance witnessed a negative net outflow of $1.2 billion in the past seven days. This comes while the largest crypto exchange saw a $462 million outflow in the past 24 hours alone, per the data aggregator.  CEX data – Nov. 23 | Source: DeFi Llama Nansen reported on Nov. 22 that Binance’s outflow s continue while a mass exodus of funds has not yet occurred. You might also like: SEC Commissioner on spot Bitcoin ETFs: “No reason to block” Per DeFi Llama, only Bitstamp saw a higher outflow of funds in the past 24 hours than Binance — reaching a negative net flow of $498.59 million. Huobi comes third, after Binance, with a total outflow of almost $79 million over the past day.  Moreover, the total amount of Binance’s clean assets — funds excluding the exchange’s own to...

AirBit Club co-founder Dos Santos is now the last AirBit defendant not yet sentenced but is scheduled to learn his fate on Oct. 4, 2023. The United States District Court for the Southern District of New York is progressing with the sentencing procedure of key individuals behind the cryptocurrency Ponzi scheme AirBit Club. The office of the U.S. attorney for New York on Oct. 3 announced the sentencing of three of the five surviving defendants in the AirBit case, including Scott Hughes, Cecilia Millan and Karina Chairez. The sentences came months after all three defendants pleaded guilty to money laundering and other charges in the AirBit case in early 2023. Hughes, an attorney who allegedly laundered approximately $18 million in AirBit Club fraud proceeds, was sentenced to 18 months in prison. Millan, a senior-level promoter of AirBit Club, was sentenced to five years in prison. Chairez, another senior-level promoter of AirBit Club, was sentenced to one year and one day in prison. Add...

U.S. Representative Don Beyer has introduced a new bill, the Off-Chain Digital Commodity Transaction Reporting Act. This bill aims to safeguard investors from manipulation, disputes, and fraud in the crypto market. According to the new proposal, every trading platform must report all transactions to a repository registered with the Commodity Futures Trading Commission (CFTC).  You might also like: US CFTC official calls for developing fraud database Rep. Beyer stated: “As consumers increasingly turn to large digital asset trading platforms to conduct their business, thousands of transactions each day are conducted off the publicly verifiable blockchain,”. “Unfortunately, internal record keeping among these private entities can vary wildly, and this can leave investors and consumers vulnerable to fraud and manipulation. This bill is a common-sense measure to restore some transparency and confidence to the digital asset market.” The main obj...

A New York man has been arrested for allegedly orchestrating a multimillion-dollar cryptocurrency fraud and money laundering scheme just months after his son was arrested for his role in the same plot. Sixty-year-old Eugene William Austin, JR. — known as Hugh Austin — was arrested on July 5, charged with one count each of conspiracy to commit interstate transportation of stolen property, conspiracy to commit money laundering, and conspiracy to commit wire fraud, the Department of Justice (DoJ) announced on Wednesday.  His son, Brandon P. A US tin, was arrested and pleaded guilty to money laundering on April 13 as part of the duo’s scheme. It’s alleged that the pair took out loans with no intention of paying them back, offered marketing services without carrying them out, and acted as crypto brokers while pocketing investors’ cash. It’s also claimed they spent $10 million in stolen funds on lavish hotels and personal expenses . Read more: How wire fraud...