The U.S. Department of Justice (DOJ) announced on Jan. 21 that CLS Global FZC LLC has agreed to plead guilty to one count of conspiracy to commit market manipulation and wire fraud.
CLS Global, a UAE-registered market maker, will plead guilty to market manipulation and wire fraud charges as part of a plea deal with the U.S. Department of Justice (DOJ). The plea deal includes a $428,059 penalty, consisting of seized cryptocurrency and a fine.
The DOJ announced the plea deal on Jan. 21. If approved by the court, CLS Global will be barred from participating in U.S. cryptocurrency markets. The charges against the company stem from allegations that it manipulated its cryptocurrency trading volumes to attract investors. CLS Global is also accused of promoting the practice to U.S. investors.
According to the DOJ, CLS Global was caught in an FBI sting operation involving a fake cryptocurrency company called Nexfundai. The undercover operation centered around an Ethereum-based token that traded on Uniswap. During a videoconference, an unnamed CLS Global employee explained how the company uses an “algorithm” to generate the trading volumes needed to meet exchange listing requirements.
The employee, who reportedly bragged about how the wash trading was difficult to track, allegedly knew the practice was illegal.
“It’s very hard to track. . . . We’ve been doing that for many clients. I know that it’s wash trading and I know people might not be happy about it,” the employee said.
CLS Global has also agreed not to use crypto trading platforms available to U.S. investors and will make annual certifications confirming that its business practices adhere to the conditions set in the plea agreement.
The statement also notes that the UAE-registered company is facing a civil enforcement action by the U.S. Securities and Exchange Commission (SEC) over its alleged violations of securities law. As a result, the funds seized from or paid by CLS Global will be credited in the SEC resolution, and vice versa.
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