Crypto firm fined $428K after FBI sting reveals wash trading scheme

CLS Global FZC LLC, a cryptocurrency financial services firm based in the United Arab Emirates, has been fined $428,059 and sentenced to three years of probation after pleading guilty to market manipulation and wire fraud.

The U.S. Department of Justice (DOJ) announced the penalty on April 2, 2025, following an undercover sting operation that exposed the firm's involvement in illegal wash trading practices.

The investigation centered on NexFundAI, a fictitious Ethereum-based (CRYPTO:ETH) token created by federal agents to detect fraudulent activities.

Posing as a legitimate crypto startup, the agents approached CLS Global for promotional services.

The firm agreed to provide "market-making" services, which included executing wash trades to artificially inflate trading volumes and create the illusion of high market demand.

This practice involved self-trading across multiple wallets, a tactic CLS Global admitted to using for other clients as well.

During recorded video calls with undercover agents in mid-2024, a CLS Global representative detailed how their algorithm facilitated untraceable wash trades.

“It’s very hard to track,” the employee stated, acknowledging the deceptive nature of the practice.

The sentencing includes both a financial penalty and operational restrictions.

CLS Global is barred from participating in U.S.-accessible cryptocurrency markets during its probation period and must certify compliance annually.

The funds seized as part of the penalty will be applied to both criminal and civil cases brought by the DOJ and the U.S. Securities and Exchange Commission (SEC).

The SEC has also filed a separate lawsuit alleging violations of securities laws.

This case highlights increasing regulatory scrutiny in the cryptocurrency sector.

Wash trading, a form of market manipulation where assets are bought and sold simultaneously to fake market activity, undermines investor trust and distorts market integrity.

Ian McGinley, Enforcement Director at the Commodity Futures Trading Commission (CFTC), emphasised that such practices harm both investors and legitimate participants.