Breaking! FBI sting operation sparks chaos in the crypto market, market makers admit to creating fake trades themselves, retail investors' last ATM for withdrawals has been smashed?

Two years ago, a carefully planned FBI sting operation finally resulted in arrests.

According to the U.S. Department of Justice announcement, by 2025, executives from Gotbit, Vortex, Antier, and Contrarian who were arrested or extradited from Singapore to the U.S. have been appearing in court, most of whom have pleaded guilty in the face of overwhelming evidence.

The evidence that leaves them speechless is exactly their own words spoken aloud.

In October 2024, the FBI announced an enforcement operation codenamed "Operation Token Mirrors" targeting the crypto space.

Unlike past passive investigations, this time they took the initiative: they fabricated a project called NexFundAI, reached out to market makers, and asked if they could help manipulate the market.

As a result, all of these "market makers" agreed without exception.

The boastful claims made to showcase their abilities later landed each of them in prison.

This operation uncovered the gray industry chain behind "volume washing" and "K-line painting" in the crypto market, and also allowed many to see for the first time how the "hype" of countless tokens was created.

In 2024, the FBI's Boston field office led the registration of a fake company, created a professional website and white paper, and packaged the phishing project NexFundAI as a project combining AI and finance, claiming it could "generate passive income through AI investments."

The total token supply was 100 billion, a common tactic seen in the market.

After launching the token on Uniswap and adding liquidity, undercover agents posed as project representatives and proactively contacted several well-known market-making firms, openly requesting volume washing and activity creation.

Almost all the contacted companies agreed.

The FBI recorded all conversations and videos, and traced the flow of funds on the blockchain, firmly securing the evidence.

According to the DOJ's public information, during their exchanges, the market makers almost revealed the entire gray industry’s secrets.

One defendant, ZM Quant, showed the undercover agent a "trading robot" capable of generating trading volume on Telegram, describing how to "trade ten or twenty times per minute" to "increase volume" and "push up prices," as well as using multiple trading wallets to avoid making the trades look fake.

CLS employee Andrey Zhorzhes was more straightforward: "We have an algorithm that can basically trade autonomously, buy and sell stocks."
"The purpose of increasing trading volume is... to make the token look natural and active, attracting more traders."
"This is hard to trace... We’ve been doing this for many clients."
"I know it’s fake trading, and I know people might be unhappy about it."

These two firms only "generate activity," while MyTrade takes the lead in "harvesting" investors.

According to Liu Zhou, founder of MyTrade, the purpose of fake trading includes "demonstrating ongoing trading activity"; "creating enough volume to exempt the project from listing fees on exchanges"; and "executing pump-and-dump schemes."

Liu Zhou said the secondary market’s goal is to find other buyers within the community—those you don’t know or don’t care about—because "we must make (other buyers) lose money to profit."

According to the DOJ announcement at the end of March, ten people have been prosecuted or pleaded guilty in the past two years, including the notorious executives of Gotbit.
Additionally, several foreign nationals from Russia, Serbia, and India have also been charged.

Ironically, FBI’s sting operation not only caught big fish but also snagged some small fry.

Because NexFundAI was disguised to look very authentic, and with the cooperation of the manipulators, the manipulated K-lines attracted real money buyers.
When the operation ended and liquidity was withdrawn, the losses of these investors were real and recorded on the blockchain.

Initially, these users didn’t know who to turn to for rights protection until the DOJ released information.
In the end, the FBI, which was heavily criticized, even set up a victim compensation channel to return the money.

This is probably the most unique "government refund" in crypto history.

Even more ironically, on the day the DOJ announcement was released, someone copied the NexFundAI contract, launched a fake coin to ride the hype, and used the same FBI phishing tactics at the same "baiting" spots, earning $127k in one day.

In 2025, the FBI conducted another similar operation, using a project called Lexobit to lure the manipulators out again.
TRM Labs, which assisted the FBI in collecting on-chain evidence, revealed some details.
Gotbit was caught again.
Investigators stated that out of 1,221 transactions in a certain project, 1,209 (99%) could be traced back to Gotbit’s wallets.

In June 2025, the court confiscated 1.2 million USDT from a wallet belonging to Gotbit executive Antoine Tsao, which was also the payout address used by the undercover agent.

In conversations with investigators, Antoine Tsao explicitly stated: "We don’t make moral judgments."

The "Operation Token Mirrors" plan is still ongoing, with further exposures of the behind-the-scenes black hands behind the market’s wild swings to come.

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