CLS Global, a financial services firm that acted as a “market maker” in the crypto industry, has agreed to resolve criminal charges related to fraudulent market manipulation.
The company duped investors by generating fake trading volume through automated self-dealing on Uniswap.
FBI Uncovers Fraudulent Crypto Trading in Undercover Operation
According to an announcement from the Boston US Attorney’s Office, CLS Global will pay $428,059. The penalty includes both a fine and the seizure of crypto assets. Additionally, the firm will also be prohibited from participating in US crypto markets.
The firm will plead guilty to charges brought in a 2024 indictment from a federal grand jury in Boston, including conspiracy to commit market manipulation and wire fraud.
CLS Global was charged for its involvement in “wash trading.” This is a fraud practice where a company artificially inflates the trading volume of a cryptocurrency to mislead investors. Wash trading involves simultaneous buying and selling of the same asset, creating the illusion of market activity without actual market risk.
The company, based in the United Arab Emirates, provided market-making services for crypto businesses. Despite being located outside the US, CLS Global offered its services to US investors through its public website and promotional materials.
The charges followed an undercover FBI investigation targeting crypto wash trading.
“As a result of an FBI Boston investigation, CLS Global FZC LLC, a cryptocurrency financial services firm known in the industry as a “market maker,” has agreed to resolve criminal charges related to cryptocurrency wash trading,” the FBI said in a tweet.
As part of the probe, authorities set up a fake crypto business called NexFundAI. CLS Global was then hired to artificially generate trading volume for NexFundAI’s token to meet crypto exchange listing requirements.
In meetings held in mid-2024, a CLS Global employee explained that the firm could “help with volume generation” by using algorithms that made it appear as though there was organic trading activity. The employee admitted that the practice constituted wash trading but downplayed its ethical implications.
“The Securities & Exchange Commission brought a related civil enforcement action alleging violations of the securities laws and has entered into a separate resolution with CLS Global,” the announcement added.
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