- CLS Global, a cryptocurrency market maker, has pleaded guilty to charges of market manipulation and wire fraud
- The company will pay $428,059 in fines and seized cryptocurrency while being banned from U.S. cryptocurrency markets
- An undercover operation revealed CLS Global’s use of fraudulent “wash trading” techniques to manipulate trading volume
CLS Global, a financial services firm specializing in cryptocurrency market-making, has pleaded guilty to charges of conspiracy to commit market manipulation and wire fraud. As part of a settlement with US authorities, the UAE-based company will pay $428,059 in fines and forfeited assets. Additionally, CLS Global will be barred from conducting cryptocurrency transactions involving US investors or servicing US-based cryptocurrency clients.
Undercover Operation Reveals Fraudulent Practices
The charges stem from a federal investigation into fraudulent cryptocurrency trading practices, including “wash trading,” where fake trades are executed to create the illusion of market activity. Law enforcement used a decoy operation involving NexFundAI, a fabricated cryptocurrency company with its own Ethereum-based token, to uncover the illicit activities.
During several videoconferences in 2024, a CLS Global employee openly discussed their ability to inflate trading volume on Uniswap using self-trading algorithms. “It’s very hard to track… we’ve been doing that for many clients,” the employee admitted, emphasizing the deceptive nature of the operation. The firm even provided detailed reports generated by its proprietary “volume generation algorithm,” further solidifying evidence of wrongdoing.
Worse to Come for CLS
As part of the plea agreement, CLS Global has agreed to cease all cryptocurrency-related activities in the United States. The company must also make annual certifications to ensure compliance with these restrictions. Worse is to come, however, as the Securities and Exchange Commission (SEC) has filed a separate civil enforcement action against CLS Global for securities law violations.
The SEC’s action demonstrates that, while the new administration me be more open to promoting the crypto sector, it still will not tolerate transgressors.
