CLS Global, a cryptocurrency financial services firm based in the United Arab Emirates, has agreed to plead guilty to U.S. charges. The company was implicated in aiding the manipulation of a digital token market established by the FBI to uncover fraud in the cryptocurrency sector.
The investigation, known as "Operation Token Mirrors," led by federal prosecutors in Boston, involved three companies and 15 individuals in a specialized undercover operation focusing on cryptocurrencies.
In a groundbreaking move, the FBI orchestrated the creation of a digital token and a fictitious cryptocurrency company to entrap fraudsters within the market. However, CLS Global has not commented on the matter through its legal representation.
While CLS Global emphasized its commitment to compliance, ensuring operational independence from U.S. markets and regulations, prosecutors revealed the firm's involvement as a market maker offering illicit trading services to cryptocurrency companies. As part of the orchestrated sting operation, CLS Global agreed to manipulate the market for the FBI-backed NexFundAI token operating on the Ethereum blockchain.
The company confessed to facilitating fraudulent activities for the NexFundAI token, including wash trading, a deceitful practice to artificially boost an asset's trading metrics.
Facing the consequences, CLS Global is set to admit guilt to fraudulent manipulation charges, pay a fine of $428,059, and be prohibited from engaging in cryptocurrency transactions on platforms accessible to U.S. investors or serving U.S. cryptocurrency clientele. Additionally, the company will provide annual certifications on its operations and settle relevant civil claims with the U.S. Securities and Exchange Commission.