A crypto financial services firm has decided to plead guilty to charges in the U.S. regarding market manipulation for a crypto token created by the FBI. This token was designed to catch fraudsters. CLS Global, based in the United Arab Emirates, admitted to engaging in wash trading and manipulating the market for this FBI token.
According to a plea agreement from January 21, CLS Global will plead guilty to two counts: fraudulent manipulation of cryptocurrency trading volumes and wire fraud. The U.S. Attorney’s Office in Massachusetts stated that CLS will pay a fine of $428,059 and forfeit all funds held in accounts on crypto exchanges like Binance and KuCoin.
CLS was charged in September after the FBI launched an operation involving a token called NexFundAI (NEXF). This token aimed to attract individuals involved in fraudulent activities, particularly pump-and-dump schemes. The FBI posed as scammers and sought help to inflate the trading volume of NEXF, tricking investors into thinking the token was more popular than it really was.
As part of the plea deal, CLS admitted to providing services for the NexFundAI token, including wash trading, to lure investors into buying it. The agreement prohibits CLS from engaging in crypto transactions on platforms accessible to U.S. investors. Additionally, the firm will be on probation for three years.
CLS must also submit annual certifications to the Securities and Exchange Commission (SEC) to confirm that it is following this prohibition. In October, the SEC filed separate civil charges against CLS for violating securities laws. The firm has reached a separate resolution with the SEC.
The district attorney’s office mentioned, “Moneys seized from or paid by CLS Global will be credited in the SEC resolution, and vice versa.” Last October, the U.S. Justice Department announced that 18 individuals faced charges in connection with these cases. Another company, MyTrade MM, is also accused of offering services to NexFundAI.
This operation marks the first public case where the FBI created a digital token and a fake crypto company to catch fraudsters in the market. CLS Global has not yet responded to requests for comment.