Written by Nate Raymond
BOSTON (Reuters) – A cryptocurrency financial services company agreed on Tuesday to plead guilty to U.S. charges that it offered to help manipulate the market for a digital token created at the request of the FBI to help detect fraud in the cryptocurrency sector.
UAE-registered CLS Global was one of three companies and 15 individuals charged by federal prosecutors in Boston last year following a new undercover investigation focused on cryptocurrencies.
The investigation, dubbed “Operation Token Mirrors,” was the first time the FBI directed the creation of its own digital token, as well as a fake cryptocurrency company, to help hunt and arrest fraudsters in the market.
CLS’s attorney did not respond to a request for comment.
The company said it has always sought to take its compliance obligations seriously and ensure its operations remain separate from US markets and regulatory systems.
Prosecutors said CLS was one of three alleged market makers who provided illicit trading services to cryptocurrency companies and, during the sting operation, agreed to help manipulate the market for the FBI-backed NexFundAI token, which runs on the Ethereum blockchain.
In court papers, the company admitted that it agreed to provide services for the NexFundAI token that involved fictitious transactions called “wash trading,” designed to artificially inflate an asset’s trading volume or price.
CLS will plead guilty to two counts of fraudulently manipulating cryptocurrency trading volume and pay $428,059, prosecutors said Tuesday.
The company will also be prohibited from engaging in cryptocurrency transactions on trading platforms available to U.S. investors or providing services to U.S. cryptocurrency clients, prosecutors said.
CLS Global has also committed to filing annual certifications on its business practices and agreed to settle related civil charges with the US Securities and Exchange Commission.
(Reporting by Nate Raymond in Boston; Editing by Richard Chang)
