US Authorities Take Action Against UAE-Based CLS Global, Imposing a $428,000 Fine for Over 80,000 Wash Trades

Following a sting operation conducted by the Federal Bureau of Investigation (FBI), the US government penalized UAE-based market-making entity CLS Global with a fine of $428,000 on April 2, 2025, for its involvement in a wash trading scheme that artificially inflated the trading volumes of digital assets on exchanges based in the US.

According to Ian McGinley, the Enforcement Director of the Commodity Futures Trading Commission (CFTC), “Wash trading compromises trust in the marketplace and adversely affects both investors and legitimate market players. This case illustrates that the CFTC will not condone such manipulative practices—no matter where the firm is situated.”

Additionally, the court has imposed a three-year probation on the market maker, during which it is prohibited from participating in digital currency markets available to US investors.

Significantly, this punishment follows CLS Global’s guilty plea for wash trading on Uniswap, a decentralized crypto trading platform, this January. The plea agreement involved a $428,000 penalty, which includes seized crypto asset along with the fine that the market maker is required to remit to the US government.

CLS Global hit with a $428K fine for wash trading! The crackdown on crypto fraud continues, emphasizing the necessity for transparency and crypto law. pic.twitter.com/tK2Oa9AHj5

— AIDog (@AIDOG_AI) April 4, 2025

Furthermore, the charges against CLS Global originate from a September 2024 indictment alleging one count of conspiracy to engage in crypto market manipulation and wire fraud, alongside an additional wire fraud count.

From February to September 2021, the crypto market maker conducted over 80,000 wash trades. The Department of Justice (DOJ) has accused the company of executing transactions that mimic authentic crypto market activity; however, the buyer and seller are the same entity.

CLS Global performed wash trades to enhance visibility and create an illusion of buyer interest for specific tokens, thus misleading market participants.

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CLS Global Manipulated Trading Volumes on Uniswap to Fulfill Exchange Listing Criteria

CLS Global’s questionable actions relate to its partnership with NexFundAI, a crypto entity and an Ethereum-based token that the FBI established as part of its operations aimed at combating market manipulation.

In the context of the sting operation, NexFundAI sought CLS Global’s assistance in fulfilling exchange listing criteria, which the market maker accepted, leading to the artificial inflation of trading volumes on Uniswap.

The crypto market maker employed an algorithm to simulate genuine buying and selling through self-trading across various wallets. Moreover, the DOJ indicated that CLS Global and its US affiliate, Clarity Ventures, deliberately misrepresented their trading activities to trading protocol operators.

CLS Global positioned itself as a market fluidity provider and market maker capable of assisting tokens to gain momentum during their initial trading phases, coupled with claims of utilizing proprietary algorithms to ensure price stability and generate volume.

This case marks one of the initial instances where a foreign crypto market maker has faced penalties from US-based regulators for actions on US exchanges, signifying a move towards extraterritorial enforcement in the crypto asset sector.

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The post US Regulators Crack Down on UAE-Based CLS Global with a $428,000 Penalty Over 80,000 Wash Trades appeared first on 99Bitcoins.