A UAE crypto firm has admitted to trading on Uniswap after an FBI sting
A UAE-based crypto market maker has admitted to orchestrating a sophisticated wash-trade scheme to defraud US investors and create millions in fake trading volume through automated self-trades on Uniswap.
Federal prosecutors in Boston are expected to plead guilty to charges of market manipulation and wire fraud after CLS Global was caught in an FBI sting. announced Wednesday.
Under the tort agreement, CLS Global is ordered to pay more than $428,000 in fines and forfeited assets. The company is also subject to full exclusion from US crypto markets and must submit annual compliance certificates.
Last October, the FBI “Operation Token Mirrors,” performed with the prospect of baiting and catching fraudulent entities in the industry.
During the investigation, the FBI launched A fake crypto called NexfundAI and coordinated with federal agencies Bringing down CLS Global and two other “so-called market makers.” This included nine individuals involved in the manipulation of crypto assets “offered and sold as securities.”
At the time, the charges against CLS Global and other firms represented the first set of criminal charges against financial services firms for market manipulation and wash trading in the crypto industry.
Volume generation algorithms
CLS Global, which employs more than 50 people outside the US, marketed itself As a legitimate market maker serving over 500 clients since 2017.
The company said on its official website that it has partnered with well-known centralized exchanges, including Binance, Bybit, KuCoin, Bitfinex, OKX, Bitget and Crypto.com, among others.
But behind the professional facade, prosecutors said, CLS Global operated a technical infrastructure designed specifically to manipulate crypto markets.
A sophisticated set of custom “volume generation” algorithms reportedly traded between multiple wallets to create the illusion of organic market activity.
“It’s very hard to track,” a CLS Global official boasted in recorded video meetings explaining their volume-building algorithm. “That’s what we do for a lot of customers.”
Between August 23 and September 18, 2024, automated systems generated $595,000 in fake volume for the FBI token, which accounted for 98% of its total trading activity. SEC Complaint.
“I know it’s a wash trade, and I know people can’t be happy about it,” the employee admitted in a meeting with undercover agents cited by the U.S. Attorney’s Office, indicating he was aware of the scheme’s illegal status.
While the main centralized exchanges were marketed by CLS Global as business partners, Uniswap was a place used only for operations until law enforcement “disabled” the token.
Uniswap did not immediately return a request for comment.
Edited by Sebastian Sinclair
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