Cryptocurrency Financial Services Firm CLS Global Agrees to Plead Guilty to Fraud Charges

Cryptocurrency financial services firm CLS Global, based in the United Arab Emirates, agreed to plead guilty to charges stemming from a U.S. undercover operation targeting fraud in the crypto sector.

Cryptocurrency financial services firm CLS Global has agreed to plead guilty to charges stemming from a U.S. undercover operation targeting fraud in the crypto sector, federal prosecutors announced on Tuesday.

The investigation, known as “Operation Token Mirrors,” was the FBI’s first attempt to create its own digital token and a fake cryptocurrency company as part of a broader strategy to identify fraudsters in the crypto market.

CLS is one of three market makers and 15 individuals charged last year by federal prosecutors in Boston as a result of the probe.

According to court filings, CLS provided illicit services to the FBI-backed NexFundAI token, which ran on the Ethereum blockchain. Prosecutors said the firm engaged in wash trading—sham transactions intended to artificially boost the token’s trading volume and price.

As part of the plea agreement, CLS will plead guilty to two fraud-related counts, pay $428,059 in penalties, and withdraw from cryptocurrency transactions involving U.S. investors. The company will also be required to certify its business practices annually and has agreed to settle civil charges brought by the U.S. Securities and Exchange Commission.

“We recognize that there may be areas where we can improve our processes, and we are open to constructive dialogue with regulatory authorities,” said Filipp Veselov, CEO of CLS Global. The company added that it actively works to restrict engagement with U.S. clients.

This case is part of a broader DOJ crackdown on crypto market manipulation, with other firms like CLS Global, and ZM Quant also facing accusations of inflating token volumes. These firms allegedly engaged in similar practices, making tokens appear more active and valuable than they were, often selling them at inflated prices to outside investors.

The SEC also accused in 2023 Sigma Chain, a trading firm owned and controlled by Binance founder CZ, of engaging in wash trading on the platform of its US-based affiliate. This involved artificially inflating the trading volume of crypto asset securities, creating a misleading perception of market activity to mispresent the liquidity on Binance.US.