FBI investigators have charged a UAE-based crypto company with generating false trading volume using wash trading algorithms on the Uniswap decentralized exchange.
The US Attorney's Office for the District of Massachusetts announced a settlement with CLS Global after undercover FBI agents discovered the company engaged in market manipulation and wire fraud.
CLS Global, described as a crypto market maker, has agreed to pay $428,000 in penalties and cease all operations within the US crypto ecosystem. In addition, the company must submit annual compliance reports under the conditions defined by the Boston prosecutor's office.
FBI sting operation
In response to allegations of laundered trading on Uniswap's Ethereum DEX, the FBI launched an undercover operation, dubbed “Operation Token Mirrors,” to investigate criminals. As part of the sting, the federal agency created NexfundAI, a fake crypto project, to attract handlers.
CLS Global fell for the trap, marketing their “volume generation” algorithms to find federal agents at various video conferences. In one of these sessions, a CLS Global employee admitted to the fraudulent activity, saying that the system was deliberately designed to be difficult to detect.
Between August 23 and September 18 of last year, CLS Global allegedly generated $595,000 in fraudulent trading volume on Uniswap, according to prosecutors.
“I know it's a wash trade,” admitted the employee, acknowledging that fake size generators were used on purpose. CLS Global, which employed around 50 offshore workers, claimed partnerships with tier-1 centralized exchanges such as Binance, Bybit, and KuCoin.
Federal investigators have made efforts to combat crypto-related schemes and scams. Last November, the FBI investigated a $5 million crypto romance fraud case shortly after recovering $8 million in stolen funds from a bank robbery in Kansas.
