U.S. authorities are cracking down on crypto scammers by turning their own tactics against them. For the first time, the Federal Bureau of Investigation has disclosed that it created a cryptocurrency to bait and capture fraudsters.

The FBI claims the strategy worked, spurring market-manipulation and fraud charges against several crypto companies, including Gotbit, CLS Global, MyTrade, and ZM Quant, as well as 18 individuals. The agency says it seized more than $25 million in crypto, and several trading bots that were allegedly manipulating around 60 cryptocurrencies were shut down.

“What the FBI uncovered in this case is essentially a new twist to old-school financial crime,” said Jodi Cohen, the special agent in charge of the FBI’s Boston division.

As part of “Operation Token Mirrors,” the FBI created an Ethereum-based (ETH) cryptocurrency called NexFundAI Token to target fraudulent token developers, promoters, and market makers. The defendants allegedly lured investors with false claims and engaged in wash trading, a deceptive practice where trades are made to create the illusion of heightened market activity and demand. The manipulation inflated token prices, allowing the scammers to sell their holdings at artificially elevated prices. These market manipulators were unaware that the FBI created the token as part of the sting operation.

“This investigation, the first of its kind, identified numerous fraudsters in the cryptocurrency industry. Wash trading has long been outlawed in the financial markets, and cryptocurrency is no exception,” said Acting U.S. Attorney Joshua Levy. The news comes more than two years after the FBI announced the formation of a cryptocurrency unit within the agency.

The Securities & Exchange Commission has also filed civil complaints against Gotbit, CLS, ZM Quant, Saitama, and other companies, accusing them of securities law violations. NexFundAI token trading has been disabled, but its price was up by over 1,558% when fraudsters were active.