Crypto Firm Admits Role in Market Manipulation Scheme

Jimmy Aki
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According to a plea deal on January 21, a United Arab Emirates-based cryptocurrency firm, CLS Global, has agreed to plead guilty to charges of market manipulation and wire fraud. This admission is tied to the firm’s role in assisting the manipulation of a fake token created by the FBI to expose fraudulent cryptocurrency activities.

Details of the Market Manipulation Scheme

The Massachusetts U.S. Attorney’s Office revealed that CLS Global would pay a $428,059 fine and forfeit funds from accounts on crypto exchanges Binance and KuCoin. The charges, filed in September 2024, highlighted the use of the FBI-created token NexFundAI (NEXF) to lure bad actors engaged in fraudulent schemes.

The FBI’s innovative approach involved creating NexFundAI, a token designed to attract individuals involved in pump-and-dump schemes. By pretending to be scammers, FBI agents sought assistance from CLS Global in the market, manipulating NEXF’s trading volume.

The firm admitted to engaging in “wash trading” to inflate the token’s popularity, deceiving investors into believing it was a high-demand asset.

According to the plea agreement, CLS Global is barred from participating in cryptocurrency transactions accessible to U.S. investors for three years.

During this probationary period, the firm must submit annual certifications to the U.S. Securities and Exchange Commission (SEC) confirming its compliance with the prohibition.

In addition to the criminal case, the SEC filed civil charges against CLS in October 2024 for violating securities laws. The SEC reached a separate resolution with the firm, with funds seized or paid by CLS credited toward both settlements.

Broader Implications of the FBI Operation

This case represents the first time the FBI created a digital token to trap fraudulent operators in the crypto market. In October, the U.S. Justice Department reported that 18 individuals and another company, MyTrade MM, were implicated in related investigations surrounding NexFundAI.

The operation underscores the federal government’s growing focus on addressing illicit activities in the crypto space. Wash trading, which involves artificially inflating trading volumes to mislead investors, remains a significant issue in the industry.

By taking a proactive approach, the FBI aims to deter fraudulent practices and restore trust in digital asset markets.

Market manipulation, a long-standing concern in the crypto world, has drawn scrutiny from regulators worldwide.

The rise of cryptocurrencies has also brought new complications to personal disputes. In a separate case, Solana co-founder Stephen Akridge was accused by his ex-wife, Elisa Rossi, of taking millions in Solana (SOL) tokens and staking rewards during their divorce.

This highlights how digital assets are increasingly becoming central to high-stakes legal battles.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.