By Nate Raymond (NSE:RYMD)
BOSTON (Reuters) – A cryptocurrency financial services firm agreed on Tuesday to plead guilty to U.S. charges that it offered to help manipulate the market for a digital token created at the FBI’s behest to help uncover fraud in the crypto sector.
United Arab Emirates-registered CLS Global was one of the three companies and 15 individuals charged last year by federal prosecutors in Boston following a novel crypto-focused undercover investigation.
The probe, dubbed “Operation Token Mirrors,” marked the first time the FBI directed the creation of its own digital token, as well as a fake cryptocurrency company to help bait and catch fraudsters in the market.
A lawyer for CLS did not respond to a request for comment.
The company has said that it had always sought to take its compliance obligations seriously and ensure its operations remained separate from U.S. markets and regulatory systems.
Prosecutors said CLS was one of three so-called market makers that offered illicit trading services to cryptocurrency companies and, during the sting operation, agreed to help manipulate the market for FBI-backed NexFundAI’s token, which operated on the Ethereum blockchain.
In court papers, the company admitted that it agreed to provide services for the NexFundAI token that included sham transactions called wash trading, designed to artificially inflate an asset’s trading volume or price.
Prosecutors said on Tuesday CLS would plead guilty to two counts related to its fraudulent manipulation of cryptocurrency trading volume and pay $428,059.
The company will also be barred from participating in cryptocurrency transactions on trading platforms available to U.S. investors or providing services to U.S. cryptocurrency clients, prosecutors said.
CLS Global also committed to making annual certifications about its business practices and agreed to settle related civil charges by the U.S. Securities and Exchange Commission.
