Dubai-based crypto market maker CLS Global will plead guilty to charges related to wash trading on the decentralized exchange Uniswap.
Federal prosecutors in Boston announced Wednesday that the company will face market manipulation and wire fraud charges after falling victim to an FBI sting operation.
$428K Fine and U.S. Market Ban
As part of the plea agreement, the financial services firm will pay penalties and forfeited assets totaling over $428,000. The company will also be barred from offering services to U.S. investors and will be required to file annual compliance certifications.
A press release shows that CLS Global had been providing market-making services and other related offerings for crypto companies. The investigation specifically focused on its involvement with NexFundAI, a fake digital currency company set up by the FBI that had token trading on Uniswap.
The firm admitted that it had agreed to provide services for NexFundAI, which included wash trading to fraudulently generate trading volume and attract investors.
During several video conferences between July and August 2024, an employee explained that CLS used an algorithm for self-trading, buying, and selling from multiple wallets so that the activity was not visible and appeared organic. The worker revealed, “I know that it’s wash trading, and I know people might not be happy about it.”
The UAE-based firm then proceeded to buy and sell the token on Uniswap using its own wallets, creating fake trading volume to meet exchange listing requirements and bring in potential investors.
FBI Sting Operation
CLS Global is registered in the United Arab Emirates and has more than 50 employees based outside the U.S. It provided crypto-related services accessible to American investors, with the company’s official website listing partnerships with major centralized exchanges such as Binance, Bybit, KuCoin, Bitfinex, OKX, and Bitget.
The charges against it followed an undercover law enforcement operation targeting crypto “wash trading,” a practice where assets are bought and sold by the same party to create the illusion of market activity.
The company was one of three market makers investigated in the initiative, which also led to charges against several individuals involved in manipulating digital assets that were offered and sold as securities. This case marked the first set of criminal charges against financial services firms for market manipulation and wash trading in the industry.
Meanwhile, the Securities and Exchange Commission (SEC) also filed a related civil enforcement action against CLS Global, alleging violations of securities laws. The agency is seeking permanent injunctions, disgorgement of allegedly ill-gotten gains plus interest, and civil penalties, with any money seized from the crypto firm credited to the SEC resolution.
Binance Free $600 (CryptoPotato Exclusive): Use this link to register a new account and receive $600 exclusive welcome offer on Binance (full details).
LIMITED OFFER for CryptoPotato readers at Bybit: Use this link to register and open a $500 FREE position on any coin!
