A United Arab Emirates (UAE) crypto services company will plead guilty to charges related to a wash-trading scheme to lure investors into purchasing a token created by US law enforcement authorities.
In a statement, the U.S. Attorney’s Office for the District of Massachusetts said crypto market maker CLS Global is being charged following an undercover law enforcement operation targeting wash trading activities in the crypto market.
Wash trading is a fraudulent practice that artificially inflates the trading value of a cryptocurrency.
Those involved in the scheme simultaneously sell the asset and then buy it back, or vice versa, to generate fake trading volumes and attract investors.
The Federal Bureau of Investigation (FBI) created the cryptocurrency company NexFundAI and an Ethereum-based token as part of the investigation, which revealed that CLS Global, along with two other market makers, traded tokens for cryptocurrency companies in exchange for payment.
During video conferencing, a CLS Global employee said their company could help generate volume so that the NexFundAI token would meet crypto exchange listing requirements and attract investors. The traders employed by CLS Global then bought and sold the token on the crypto exchange Uniswap using their company’s wallet.
CLS Global admitted that it agreed to provide market making services for the NexFundAI token, including wash trading to fraudulently attract token buyers. It will also plead guilty to one count of conspiracy to commit market manipulation and bank fraud and one count of bank fraud to resolve the criminal charges.
If the plea is approved, the company will also pay $428,059 and will be barred from participating in the US crypto markets.
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Generated image: Midjourney
