CLS Global, a crypto market maker registered in the United Arab Emirates, has been hit with a $428,000 fine for wash trading of the FBI’s bait token NexFundAI.
On April 2, a federal court in Boston sentenced CLS Global on criminal charges for manipulating trading volumes of NexFundAI token. NexFundAI is a bait token launched by FBI in March 2024 as part of a sting operation called “Operation Token Mirrors.”
In October 2024, the U.S. Securities and Exchange Commission filed fraud charges against CLS Global and several other companies that had taken the bait, including ZM Quant Investment and Gotbit Consulting. MyTrade was also allegedly involved. The FBI reported that the operation led to the confiscation of $25 million in cryptocurrency, and several wash trading bots were shut down.
In addition to the $428,000 fine, the court imposed a three-year probation on CLS Global, banning the company from offering services in the U.S. during this period. CLS Global had pleaded guilty to charges in January this year.
According to a January report from Chainalysis, wash trading accounts for an estimated $2.57 billion in trading volumes within the crypto market. However, global efforts are underway to crack down on this practice, as well as broader market manipulation.
One recent example is Galaxy Digital’s $200 million settlement last month, resolving allegations of manipulating the LUNA token following an investigation by New York regulators.
Earlier, the SEC accused Justin Sun for manipulating the markets for BitTorrent (BTT) and Tron (TRX) through wash trading, giving the false impression of active trading and liquidity. However, the case has been put on hold.
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