Crypto financial firm CLS Global has admitted to market manipulation involving the NextFundAI (NEXF) token, pleading guilty to the allegations. According to the plea deal filed by the authorities yesterday, the firm agreed to plead guilty to two counts of fraudulent manipulation of trading volume and wire fraud.
CLS Global carried out wash trading, a move in which digital assets are bought and sold simultaneously, giving the general public a false sense of the trading volume. It is considered illegal and attracts varying penalties across different countries.
CLS Global pleads guilty to market manipulation
As part of its plea agreement, CLS Global will forfeit several funds it is holding on wallets of popular exchanges, including Binance and KuCoin. In addition, the firm has been mandated to pay a fine of about $428k. Also, the firm has been barred for three years, meaning it won’t be able to service Americans in the next three years.
The firm has also signed an agreement to provide the United States Securities and Exchange Commission (SEC) with proof that it is adhering to the ban annually. The company had been at the heart of a previous SEC investigation, reaching an agreement with the agency over its Securities law violation. Money seized from or paid by CLS Global will be credited in the SEC resolution, and vice versa,” the district attorney’s office added.
FBI sting operation reveals fraud
The FBI created the NEXF token as part of its strategy to unveil bad actors carrying out pump-and-dump schemes in the industry. It was created using AI, and positioned to detect fraudulent transactions. It is the first time that the agency has carried out such an act to unmask illicit actors in the industry.
After the token’s launch, the agency reached out to several firms and individuals who were involved in several market aspects, especially market making. With the decentralized sector, it was easier to artificially increase the token’s price amid other moves to bait investors. According to the DOJ, 18 other individuals were caught in the same offense as CLS Global, with another firm MyTrade MM also caught.