U.S. court fines UAE crypto firm CLS Global for crypto trading volume manipulation
CLS Global fined $428K, banned from U.S. over crypto market manipulation.
In a high-profile crackdown on fraudulent trading practices, a federal court in Boston has fined cryptocurrency market maker CLS Global $428,059 and barred it from operating in the United States for three years.
The sentencing, announced by the Massachusetts U.S. Attorney’s Office on April 2, stems from CLS Global’s involvement in a crypto market manipulation scheme uncovered through an undercover FBI sting, reports Cointelegraph.
CLS Global, a United Arab Emirates-based firm, pleaded guilty in January to one count of conspiracy to commit market manipulation and one count of wire fraud. The charges were linked to the company’s agreement to manipulate trading in NexFundAI, a fake token launched by the FBI in May 2024 to expose illegal “wash trading” in the cryptocurrency sector.
FBI Sting Nets Multiple Firms in Market Fraud Scheme
The investigation revealed that CLS Global—alongside at least two other firms—offered fraudulent market-making services for NexFundAI, designed to mislead investors by inflating trading volume and fabricating demand. The Securities and Exchange Commission (SEC) brought related fraud charges last October against CLS Global and employee Andrey Zhorzhes, as well as Hong Kong-based ZM Quant Investment and Russia-linked Gotbit Consulting.
Founded in 2017 by former Latoken executive Filipp Veselov, CLS Global marketed itself as a provider of “high-quality” market-making and trading consultancy. However, its practices came under scrutiny amid growing regulatory efforts to curb manipulation in digital asset markets. The firm, which continues to operate via its X social media profile with over 110,000 followers, has not commented publicly on the sentencing.
Wash Trading Remains a Challenge for Crypto Integrity
Wash trading—where assets are bought and sold repeatedly to fabricate volume—remains a persistent issue in the crypto market. Chainalysis estimates $2.6 billion in annual wash trading activity, or roughly 2% of total daily trading volumes. However, earlier research from the U.S. National Bureau of Economic Research suggests the problem could be far worse, with up to 70% of volume on unregulated exchanges potentially tied to illicit practices.
The case against CLS Global underscores the increasing pressure on regulators and law enforcement to rein in manipulation in the digital asset space. As the crypto market grows, legal actions like these may become more frequent as authorities seek to instill greater transparency and investor protection.
Recently we wrote, that Genius Group is suing its own executives over the unlawful sale of assets worth more than $30 million.
