Key Takeaways:
- UAE-based CLS Global FZC LLC pleaded guilty to market manipulation of the FBI-created NexFundAI (NEXF) token during a sting operation targeting crypto fraud.
- The firm was fined $428,059, ordered to forfeit funds, and prohibited from crypto trading on U.S.-accessible platforms for three years.
- The FBI’s operation marked a first, using a self-created token to expose fraud, with 18 individuals and another firm charged in connection.
A UAE-based cryptocurrency firm, CLS Global FZC LLC, has pleaded guilty to market manipulation charges involving a token created by the FBI.
The FBI designed the NexFundAI (NEXF) token as part of an undercover operation to expose fraudulent activities in the crypto sector, including pump-and-dump schemes.
Crypto industry “market maker” CLS Global FZC LLC agrees to resolve criminal market manipulation charges resulting from undercover operation targeting cryptocurrency “wash trading” – sham trading activity intended to attract investors.
— U.S. Attorney Massachusetts (@DMAnews1) January 21, 2025
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CLS Global admitted to inflating the token’s trading volume through wash trading to mislead investors.
Under a plea agreement announced on January 21, CLS Global will pay a $428,059 fine, forfeit funds held in Binance and KuCoin accounts, and comply with a three-year probation period.
The firm is also banned from engaging in crypto transactions on platforms accessible to U.S. investors and must certify compliance annually to the U.S. Securities and Exchange Commission (SEC).
Related civil charges brought by the SEC have been resolved alongside the criminal case.
The FBI operation is a significant milestone, marking the first time the agency used a self-created token to uncover fraud.
In total, 18 individuals and another company, MyTrade MM, face charges related to the operation.
Funds seized from CLS Global will support broader SEC settlements.
The firm has not commented publicly on the case.