- CLS Global has been sentenced for fraudulent manipulation of cryptocurrency trading volumes
- The firm has been ordered to pay $428,059 and is prohibited from participating in U.S. cryptocurrency markets for three years
- This sentencing marks a significant step in addressing illegal practices within the cryptocurrency industry
Cryptocurrency market maker CLS Global has been sentenced to a $428,059 fine for its involvement in the fraudulent manipulation of cryptocurrency trading volumes. In addition to the fine, the firm has been prohibited from participating in U.S. cryptocurrency markets for the next three years. This development underscores the ongoing efforts to combat illegal activities within the digital asset sector, in particular, the gray area of market making.
CLS Global Boasted of Invisibility
CLS Global, registered in the United Arab Emirates, offered market-making services to cryptocurrency companies, including those accessible to U.S. investors. The firm employed over 50 individuals, all located outside the United States. Their services included “wash trading,” a deceptive practice involving self-trading to create the illusion of increased market activity and attract unsuspecting investors.
In discussions with undercover law enforcement agents posing as representatives of a fictitious cryptocurrency company, a CLS Global employee detailed the firm’s wash trading services, stating, “We have an algorithm that… basically does self-trades, buying and selling… from multiple wallets so it’s not visible.” The employee further acknowledged, “I know that it’s wash trading and I know people might not be happy about it.”
$428,059 Fine
CLS Global pleaded guilty in January to one count of conspiracy to commit market manipulation and wire fraud, and one count of wire fraud. The sentencing, delivered in federal court in Boston, mandates the firm to pay $428,059, representing both a fine and seized cryptocurrency.
Additionally, CLS Global is sentenced to a three-year probation period during which it is barred from participating in U.S. cryptocurrency markets. This case is part of a broader crackdown on fraudulent practices in the cryptocurrency industry, highlighting the commitment of U.S. authorities to ensure market integrity.
Market making has always operated in a slightly gray area, and this case shows that stepping over the line runs the risk of prosecution.
