CLS Global, a financial services firm based in the UAE, has found itself in hot water after admitting to some shady trading practices on Uniswap.
Simply put, the firm was caught generating fake trading volume through what’s known as wash trading.
No land for wash trading
According to the Boston US Attorney’s Office, CLS Global will be coughing up $428,059 as part of a deal to settle criminal charges related to this market manipulation.
This fine includes both penalties and the seizure of some crypto assets. And if that wasn’t enough, the firm is now banned from participating in US crypto markets.
The charges stem from a 2024 indictment where CLS Global was accused of conspiring to commit market manipulation and wire fraud.
Wash trading is when a company artificially inflates the trading volume of a cryptocurrency to mislead investors, basically creating the illusion of activity without any real risk involved.
Global operations, global responsibility?
Even though CLS Global operates outside the US, they still managed to reach American investors through their public website and promotional materials.
This whole mess came to light thanks to an undercover FBI investigation wanted at tackling crypto wash trading.
The FBI set up a fake crypto business called NexFundAI and hired CLS Global to artificially inflate trading volumes for NexFundAI’s token just to meet exchange listing requirements.
In meetings held in mid-2024, a CLS employee even admitted that what they were doing was wash trading but tried to downplay its ethical implications.
Trading is risky
The U.S. Securities and Exchange Commission, the SEC has also joined the party with its own civil enforcement action against CLS Global for violating securities laws, reaching a separate resolution with the firm.
It’s almost tiresome now, another day, another scandal in the crypto industry. As always, keep your wallets safe because who knows what will happen next.
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