An UAE-based crypto-market maker who calls himself a “wash trader” has confessed to orchestrating a complex wash trading scheme. The scam fooled U.S. traders by generating fake trading volumes of millions through automated self dealing on Uniswap.
After falling victim to an FBI sting, CLS Global will likely plead guilty for market manipulation charges and wire fraud. Federal prosecutors from Boston Wednesday.
CLS Global must pay penalties, and will forfeit assets in excess of $428,000. In addition, the company faces a complete exclusion from U.S. Crypto markets. They will also be required to file annual compliance certificates.
On October 10, last year, FBI started. "Operation Token Mirrors," The purpose of the operation was to lure and catch fraudulent individuals within the sector.
The FBI conducted an investigation during the time of the case. launched A fake cryptocurrency called NexfundAI. Coordinate with Federal Authorities CLS Global and Two Other Companies: "so-called market makers." There were nine people involved in manipulating cryptocurrency assets "offered and sold as securities."
The charges brought against CLS Global, and other companies involved at the time were the first criminal charges filed against financial service firms in relation to market manipulation and washing trading within the crypto industry.
Volume generation algorithms
CLS Global employs more than 50 people in countries outside of the U.S. Marketing itself Since 2017, we’ve been a market maker that is reputable, serving more than 500 clients.
On its website, the company claims that it has partnered up with prominent exchanges such as Binance, Bybit KuCoin Bitfinex OKX Bitget Crypto.com Crypto.com.
But behind the professional façade, prosecutors said CLS Global operated a technical infrastructure specifically designed to manipulate crypto markets.
The most sophisticated customs "volume generation" According to reports, algorithms executed transactions between multiple wallets in order to create an illusion of organic markets activity.
"It's very hard to track," A CLS Global employee is credited with bragging during video recorded meetings and explaining the algorithm for volume generation. "We've been doing that for many clients."
Data from the an SEC Complaint.
"I know that it's wash trading, and I know people might not be happy about it," the employee admitted during meetings with undercover agents cited by the U.S. Attorney's Office, showing their awareness of the scheme's illegal status.
While CLS Global marketed major centralized exchanges as partners, Uniswap was used to host the operation in front of law enforcement. “disabled” Token
Uniswap didn’t immediately respond to a comment request.
Sebastian Sinclair is the editor