A crypto financial services firm has agreed to plead guilty to US charges of helping to manipulate markets for a crypto token created by the FBI aiming to find fraud.
The United Arab Emirates-based CLS Global agreed to plead guilty to two counts of fraudulent manipulation of cryptocurrency trading volumes and wire fraud, according to a Jan. 21 plea deal.
The Massachusetts US Attorney’s Office said that CLS would pay a $428,059 fine and forfeit all funds held in several accounts on crypto exchanges Binance and KuCoin.
CLS was charged in September after being snared by an FBI-created AI-related token called NexFundAI (NEXF), designed to draw in those engaged in fraudulent cryptocurrency activities, particularly pump-and-dump schemes.
Source: US Attorney Office Massachusetts
The FBI masqueraded as scammers and asked for help manipulating the token’s trading volume to fool investors into believing that NEXF was more popular than it was.
As part of the plea deal, CLS admitted its involvement in providing services for the NexFundAI token, including wash trading, to fraudulently attract investors to purchase the token.
According to the plea deal, CLS is prohibited from participating in crypto transactions on trading platforms available to investors located in the US and was placed on probation for three years.
The firm will have to make annual certifications to the Securities and Exchange Commission that it’s adhering to this prohibition.
CLS Global can no longer offer its services to anyone in the US as part of the plea deal. Source: CourtListener
The SEC brought separate civil charges against CLS in October, alleging violations of securities laws, and has entered into a separate resolution with the company.
“Moneys seized from or paid by CLS Global will be credited in the SEC resolution, and vice versa,” the district attorney’s office said.
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The US Justice Department said last October that 18 people were facing charges in the combined cases, and one additional company, MyTrade MM, also allegedly offered services to NexFundAI.
The operation was the first public case in which the FBI created its own digital token and a fake crypt company to help bait and catch fraudsters in the market.
CLS Global did not immediately respond to a request for comment.
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