In a plot twist straight out of a Hollywood movie, Dubai-based crypto firm CLS Global has admitted to wash trading on the decentralized trading platform Uniswap. The US prosecutors for the District of Massachusetts made an announcement, confirming that the crypto market maker will be pleading guilty to the charges leveled against it that border on fraudulent manipulation of cryptocurrency trading volume.
FBI’s Undercover Operation Reveals Illegal Practices on CLS Global
It all started when the FBI launched NexFundAI, an Ethereum-based token, on Uniswap. With the make-believe project, authorities were able to gather undeniable evidence of CLS Global’s involvement in wash trading, a deceptive way of creating illusional trading activity to mislead investors about an asset’s true demand.
Between July and August 2024, CLS Global employees held video conferences with undercover agents posing as NexFundAI representatives. In one of these meetings, prosecutors said that a CLS employee admitted that the company could help with volume generation so that NexFundAI could meet cryptocurrency exchange listing requirements and attract purchasers of the NexFundAI token.
By September, authorities had enough evidence to indict CLS Global. That is, for one count of conspiracy to commit market manipulation and wire fraud and one count of wire fraud.
Penalties and Market Ban
Going by Tuesday’s announcement, though, CLS has now agreed to plead guilty. The plea deal will see the company pay a sum total of $428,059 to the government. This amount includes cryptocurrency seized from the platform and a penalty.
Also, CLS Global will henceforth not be allowed to participate in the US crypto markets. However, it might be worth noting that the guilty plea in its entirety is still subject to court approval, according to the official statement.
On the side, the US Securities and Exchange Commission (SEC) has also started a civil case against CLS Global for violating securities laws.
Either way, it appears that authorities are winning, more so, in their efforts to protect investors and clamp down on questionable practices within the crypto market. And let’s be honest, who doesn’t love a good undercover operation? 🕵️♂️
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2025-01-22 14:05