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Dubai-based cryptocurrency market maker CLS Global admitted to engaging in wash trading on the decentralized exchange Uniswap (UNI). U.S. prosecutors from the Massachusetts District announced that the company would pay a fine of $428,059 as part of a court order. Additionally, CLS Global will be prohibited from trading on platforms accessible to U.S. investors.

FBI’s NexFundAI Scheme Exposed the Truth

CLS Global was indicted in September 2024 for market manipulation and electronic fraud conspiracy. The charges arose from a covert investigation conducted by the FBI. The agency facilitated the creation of an Ethereum (ETH) based token named NexFundAI to monitor CLS Global and two other market makers. The NexFundAI project was later deactivated during the investigation.

According to prosecutors, CLS Global employees admitted to supporting NexFundAI’s volume through wash trading methods. In video-recorded interviews, a CLS employee claimed they could assist in “volume creation.” The employee noted they made trades across multiple wallets using an algorithmic system to make these actions appear more organic and hard to trace.

Market Manipulation and Legal Proceedings

It was revealed that CLS Global employees executed NexFundAI token trading on Uniswap. These transactions artificially inflated volume data, aiming to attract investors. A CLS employee allegedly stated in the video recordings, “I know this is wash trading. People might not like this.”

Moreover, the U.S. Securities and Exchange Commission (SEC) initiated a separate legal action against CLS Global for violations of securities laws. This process is expected to be a turning point for both the company’s future and regulations within the cryptocurrency market.

This operation, supported by the FBI, has once again highlighted the importance of transparency and regulation in the cryptocurrency market. The measures taken against CLS Global serve as a deterrent example in the fight against market manipulation.

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