The DOJ announced CLS Global’s guilty plea to market manipulation and wire fraud, resulting in a $428,059 penalty and a U.S. crypto market ban.
CLS Global Agrees to Pay $428,059 Penalty Following DOJ Charges
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. If approved by the court, the plea deal will require CLS Global to pay a $428,059 penalty, consisting of seized cryptocurrency and a fine.
The charges stem from allegations that CLS Global manipulated cryptocurrency trading volumes to mislead investors and promote its services to U.S.-based clients. As part of the plea agreement, the UAE-registered company will be barred from participating in U.S. cryptocurrency markets.
Read: Federal Court Rules to Return $9 Billion in Bitcoin to Bitfinex in 2016 Hack Case
Undercover FBI Operation Uncovers Wash Trading Scheme
According to the DOJ, CLS Global was implicated during an undercover FBI sting involving a fake cryptocurrency company, Nexfundai. The operation used an Ethereum-based token on Uniswap to uncover illegal practices. During a recorded videoconference, a CLS Global employee reportedly explained how the company employed an “algorithm” to generate artificial trading volumes to meet exchange listing requirements.
The employee acknowledged the illegality of wash trading, stating: “It’s very hard to track. . . . We’ve been doing that for many clients.”
SEC Pursues Additional Civil Action Against CLS Global
The DOJ revealed that CLS Global is also facing civil enforcement action from the U.S. Securities and Exchange Commission (SEC) for alleged securities law violations. The seized funds or fines from CLS Global will be credited toward resolving the SEC’s case.
As part of the DOJ settlement, CLS Global agreed to annual certifications ensuring compliance with the plea agreement terms.
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