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CLS Global Admits to Wash Trading on Uniswap Following FBI Probe
A Dubai-based crypto market maker has admitted to engaging in wash trading activities on the decentralized exchange Uniswap, following a probe by federal authorities. The company, CLS Global, will plead guilty to charges related to market manipulation and wire fraud.
According to reports, the investigation into CLS Global’s activities was conducted as part of an undercover law enforcement operation targeting crypto “wash trading,” a practice where assets are bought and sold by the same party to create the illusion of market activity. The company is accused of using an algorithm for self-trading, buying, and selling from multiple wallets so that the activity appeared organic.
As part of the plea agreement, CLS Global will pay penalties and forfeit assets totaling over $428,000. Furthermore, the company has been barred from offering services to U.S. investors.
The case marks the first set of criminal charges against financial services firms for market manipulation and wash trading in the industry. The Securities and Exchange Commission (SEC) also filed a related civil enforcement action against CLS Global, alleging violations of securities laws.
In this case, the SEC is seeking permanent injunctions, disgorgement of allegedly ill-gotten gains plus interest, and civil penalties. Any money seized from the crypto firm will be credited to the SEC resolution.
The findings come after several video conferences between July and August 2024, in which a company employee revealed that CLS Global had engaged in wash trading practices. The worker acknowledged that the practice was illegal, stating, “I know it’s wash trading, and I know people might not be happy about it.”
CLS Global is registered in the United Arab Emirates and has more than 50 employees based outside of the U.S. Despite this, the company provided crypto-related services accessible to American investors through its official website, which listed partnerships with major centralized exchanges such as Binance, Bybit, KuCoin, Bitfinex, and more.
The development highlights the growing concern over market manipulation and wash trading in the cryptocurrency space. In response, regulators have been intensifying their efforts to crack down on these practices.
It is worth noting that this case marks a significant milestone for authorities in taking action against financial services firms engaged in illegal activities.
Source: cryptopotato.com
