The FBI did something unusual, even by federal law enforcement standards. It created its own cryptocurrency token, gave it a legitimate-sounding name, and used it as bait to catch market manipulators in the act. The operation worked.

The sting, dubbed Operation Token Mirrors, has led to criminal charges against 18 individuals and entities accused of wash trading and artificially inflating trading volumes in the crypto market. Federal authorities also seized more than $25M in digital assets connected to the alleged schemes.

How a fake token caught real criminals

The centerpiece of the operation was NexFundAI, a token that looked and functioned like any other crypto project. Except it was entirely controlled by the…