CLS Global FZC LLC, a financial services firm operating in the cryptocurrency sector, has agreed to plead guilty to charges of fraudulent manipulation of cryptocurrency trading volume. The company, recognized as a "market maker," is facing accusations outlined in a September 2024 indictment by a federal grand jury in Boston. The charges include conspiracy to commit market manipulation and wire fraud, along with one count of wire fraud.
Upon court approval of its plea, CLS Global will pay $428,059 to the government, encompassing seized cryptocurrency and fines. Additionally, it will be barred from participating in U.S. cryptocurrency markets.
The indictment alleges that CLS Global offered "market making" services for cryptocurrency firms through its website and promotional materials. Registered in the United Arab Emirates with over 50 employees outside the U.S., the firm provided services linked to cryptocurrencies accessible to American investors.
These charges stem from an undercover law enforcement operation targeting "wash trading," which involves sham trading activities designed to attract investors. This investigation led to the creation of NexFundAI, a supposed cryptocurrency company featuring a website and an Ethereum-based token on Uniswap exchange before being disabled by authorities.
CLS Global admitted providing market making services for NexFundAI that included "wash trading" tactics aimed at misleadingly attracting investors. During videoconferences between July and August 2024, a CLS Global employee detailed how their algorithm facilitated self-trades across multiple wallets to simulate organic buying and selling activity. The employee acknowledged awareness of engaging in wash trading despite potential disapproval from others.
A proposal titled "Market Making proposal" presented by CLS Global's employee showcased their dashboard illustrating total volume metrics related to their activities on Uniswap using company wallets.
As part of resolving these criminal allegations, CLS Global will refrain from participating in U.S.-based cryptocurrency transactions or offering related services within America according to terms set forth under this plea agreement; annual certifications confirming adherence are also required moving forward.
Additionally, the Securities & Exchange Commission (SEC) initiated civil enforcement actions against violations committed under securities laws leading towards separate resolutions involving credits allocated between both governmental entities regarding monetary seizures/payments made during proceedings announced jointly by United States Attorney Leah B Foley alongside Jodi Cohen representing FBI Boston Division supported further prosecution efforts undertaken via Assistant US Attorneys Christopher J Markham David M Holcomb affiliated respectively toward Securities Financial Cyber Fraud Unit involvement therein
It is important note that details cited within indictments remain allegations pending proof beyond reasonable doubt established courtroom settings ensuring presumption innocence persists until proven otherwise