Joshua S. Levy, U.S. Attorney | U.S. Attorney for the District of Massachusetts
CLS Global FZC LLC, a financial services firm known in the cryptocurrency industry as a "market maker," has agreed to plead guilty to charges related to fraudulent manipulation of cryptocurrency trading volume. The company will resolve criminal charges from a September 2024 indictment by a federal grand jury in Boston, including conspiracy to commit market manipulation and wire fraud, as well as one count of wire fraud.
Upon court approval of its plea, CLS Global will pay $428,059 to the government, which includes seized cryptocurrency and a fine. Additionally, the firm will be barred from participating in U.S. cryptocurrency markets.
The indictment alleges that CLS Global provided "market making" services for cryptocurrency companies through its website and promotional materials. Registered in the United Arab Emirates with over 50 employees located outside the United States, CLS Global offered services related to cryptocurrencies available to U.S. investors.
The charges stemmed from an undercover law enforcement operation targeting "wash trading," or sham trading activity designed to attract investors. The investigation involved creating NexFundAI, a purported cryptocurrency company with an Ethereum-based token traded on Uniswap before being disabled by law enforcement.
CLS Global admitted it agreed to provide market making services for NexFundAI that included "wash trading" to fraudulently attract investors. During videoconferences between July and August 2024, a CLS Global employee explained how they could help generate volume so NexFundAI could meet exchange listing requirements and attract purchasers. The employee detailed using an algorithm that conducts self-trades from multiple wallets to appear organic and hard to track.
A "Market Making proposal" was provided by CLS Global's employee showing their dashboard reflecting various volumes. Traders employed by CLS Global bought and sold the NexFundAI token on Uniswap using the company's trading wallets while reporting on trading activity generated by their algorithm.
As part of the resolution, CLS Global is prohibited from engaging in cryptocurrency transactions on platforms accessible to U.S. investors or providing services to U.S.-based clients per the plea agreement. They must also make annual certifications ensuring business practices comply with these prohibitions.
The Securities & Exchange Commission (SEC) brought a related civil enforcement action alleging securities laws violations and reached a separate resolution with CLS Global. Funds seized or paid by CLS Global will be credited reciprocally between this resolution and that of the SEC.
The announcement was made by United States Attorney Leah B. Foley and Jodi Cohen, Special Agent in Charge of the FBI's Boston Division. Assistant U.S. Attorneys Christopher J. Markham and David M. Holcomb are prosecuting the case.
It is important to note that details in the indictment are allegations; any remaining defendant is presumed innocent until proven guilty beyond reasonable doubt in court.
