UAE Market Maker Confesses to Wash Trading in FBI Covert Op

UAE-based CLS Global admits to wash trading, inflating crypto volumes on Uniswap; faces $428K penalty and US market ban.

Judge banging his gavel thats on fire.
Created by Kornelija Poderskytฤ— from DailyCoin

UAE-based crypto market maker CLS Global admitted to conducting a wash trading scheme to inflate trading volumes on the Uniswap decentralized exchange.

Caught in a covert FBI operation last year, the firm is set to plead guilty to market manipulation and wire fraud, marking the first criminal charges against market makers for wash trading and market manipulation in the crypto industry.

Caught During an FBI Sting Operation

CLS Global has agreed to settle criminal charges for manipulating cryptocurrency trading volumes, the US Department of Justice reported on Tuesday. 

Sponsored

The charges include conspiracy to manipulate the market and wire fraud, as the firm used algorithms to create fake trading volumes on Uniswap DEX and deceive US investors. 

Under the agreement, CLS Global faces penalties exceeding $428,000, potential exclusion from US crypto markets, and mandatory annual compliance monitoring.

In October 2024, three market makersโ€”ZM Quant, CLS Global, and MyTradeโ€”and their employees were charged with wash trading and conspiracy on behalf of NexFundAI, a cryptocurrency company and token.

NexFundAI was created in May 2024 by an FBI-operated company as part of “Operation Token Mirrors,” a covert operation designed to expose market manipulation in cryptocurrency markets.

Soon after, the U.S. Department of Justice (DoJ) announced the arrests and charges of eighteen individuals and companies for alleged digital asset market manipulation.

According to the charging documents, cryptocurrency companies engaged in deceptive practices, including making false statements about their tokens and conducting wash trades to fabricate trading activity. These actions misled investors and artificially inflated token prices. The companies also hired market makers to execute wash trades and further manipulate the markets.

“Three market makers โ€” ZM Quant, CLS Global, and MyTrade โ€” along with their employees are charged with allegedly wash trading and/or conspiring to wash trade on behalf of NexFundAI, a cryptocurrency company and token created at the direction of law enforcement as part of the government’s investigation,” the DoJ stated

Manipulated by Fake Trading Volumes

CLS Global, with over 50 employees outside the US, has portrayed itself as a legitimate market maker serving clients since 2017. It claimed partnerships with major centralized exchanges, including Binance, Bybit, and KuCoin.

However, prosecutors revealed that CLS Global secretly employed custom “volume generation” algorithms to manipulate crypto markets by executing trades between its own wallets, creating the illusion of organic trading activity.

During the covert FBI operation, CLS Global’s systems fabricated $595,000 in artificial trading volume for the FBIโ€™s token, accounting for 98% of its activity. The firm exclusively used the Uniswap decentralized exchange (DEX) for these manipulative practices.

Why This Matters

Manipulative practices and market abuse are not new to cryptocurrency or exclusive to DeFi, but they may be more common in an unregulated market. While identifying market manipulation is still in its early stages, cases like CLS Global, which involves the first criminal charges against crypto market makers, signal an upcoming change.

Check out trending DailyCoinโ€™s articles:

SEC vs Ripple: Trump Appoints New SEC, CFTC Chairs

Ethereum Foundation Allocates 50K ETH to Support DeFi

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Alex Costa

Alex Costa is a crypto writer and investor specializing in researching, analyzing and reporting on promising small-cap projects that are gaining traction in the industry. He has been in crypto since 2018, when he began looking for hidden gems in crypto. Today, he is dedicated to finding the next top performing NFTs and tokens.

Read more