Dubai-based crypto market maker CLS Global has agreed to plead guilty to charges related to wash trading on decentralized trading platform Uniswap, the U.S. prosecutors for the District of Massachusetts announced Tuesday.
Upon court approval of the guilty plea, CLS Global will pay $428,059 to the government, including seized cryptocurrency and a fine, and will be prohibited from taking part in crypto transactions on platforms available to U.S. investors, the official statement said.
The company was indicted in September last year for one count of conspiracy to commit market manipulation and wire fraud and one count of wire fraud. These charges stem from an undercover FBI investigation into wash trading — a manipulative market practice that artificially inflates the trading volume of a certain asset to attract other investors.
In its undercover probe, the FBI created NexFundAI, an Ethereum-based token that traded on the Uniswap exchange. This helped chase down CLS and two other market making companies. The law enforcement has since disabled the crypto project.
According to the authorities, CLS admitted to providing wash trading services for NexFundAI, as evidently documented in several video conversations between July and August 2024.
“During several video conferences … a CLS Global employee explained that the company could ‘help with volume generation’ so that NexFundAI could meet cryptocurrency exchange listing requirements and attract purchasers of the NexFundAI token,” the prosecutors said.
The CLS employee allegedly said that the company used an algorithm that does self-trades, buying and selling from multiple wallets to make it less visible, organic and hard to track. CLS employed traders who bought and sold NexFundAI on Uniswap using the company’s trading wallets, according to the statement.
"I know that it's wash trading, and I know people might not be happy about it," the CLS employee allegedly said during one of the video meetings.
Meanwhile, the Securities and Exchange Commission is also pursuing a related civil enforcement action against CLS Global for alleged securities law violations.
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