The United Arab Emirates’ (UAE) largest crypto-services firm has pleaded guilty on charges related to an alleged wash trading scheme designed to trick investors into purchasing a token developed by US law enforcement officials.
The U.S. Attorney’s Office for the District of Massachusetts has released a press release stating that CLS Global, a crypto-market maker, is being charged following an undercover operation to target wash trading in the cryptocurrency market.
A fraudulent practice, wash trading involves artificially inflating a cryptocurrency’s trading value.
The scheme involves selling the asset, then buying it back. Or vice versa. This is done to create phony trading volumes and lure investors.
As part of its investigation, the Federal Bureau of Investigation created NexFundAI, a cryptocurrency company, and a token based on Ethereum. The FBI found that CLS Global along with other two market makers had washed-traded cryptocurrency tokens in return for payments.
A CLS Global employee stated in video conference that their company would help generate volume so that the NexFundAI token could meet cryptocurrency exchange listing requirements, and thus attract investors. CLS Global traders used their wallets to buy and sell the NexFundAI token at Uniswap, a crypto exchange.
CLS Global acknowledged that it had agreed to offer market-making for NexFundAI, including wash trading in order to attract fraudulent token buyers. To resolve criminal charges, it will plead guilty on one count each of conspiracy to manipulate the market and commit wire fraud as well as one count each of wire fraud.
The firm would also be required to pay $428.059 in addition to being prohibited from trading on US cryptocurrency markets.
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The post Crypto Services firm admits to wash-trading coin created by Feds undercover operation may be updated as new information becomes available.
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