UAE unregulated crypto market maker CLS ordered to pay $428,059 in fines to the SEC

UAE unregulated crypto market maker CLS ordered to pay $428,059 in fines to the SEC

After the UAE registered company CLS Global FZC LLC, a non-regulated financial services firm known in the cryptocurrency industry as a “market maker,” admitted to fraud in the United States, the company has received its sentence in federal court in Boston for criminal charges relating to its fraudulent manipulation of cryptocurrency trading volume and has been ordered to pay $428,059.

CLS Global has been ordered to pay a total of $428,059 to the government, representing both a fine and seized cryptocurrency. The court also sentenced CLS Global to a term of probation for three years, during which CLS Global is prohibited from participating in U.S. cryptocurrency markets. CLS Global pleaded guilty to one count of conspiracy to commit market manipulation and wire fraud and one count of wire fraud in January 2025. It was charged criminally in September 2024.

CLS Global provided “market making” and other services for cryptocurrency companies through its public website and other promotional materials. CLS Global was a company registered in the United Arab Emirates that employed over 50 individuals yet not regulated by UAE virtual asset regulatory authorities.

The charges against CLS Global followed an undercover law enforcement operation targeting cryptocurrency “wash trading,” sham trading activity intended to attract investors. The investigation included the creation of NexFundAI, a purported cryptocurrency company that had a website (https://nexfundai.com) and an Ethereum-based token that traded on the Uniswap cryptocurrency exchange before being disabled by law enforcement.

CLS Global agreed to provide market making services for the NexFundAI token that included “wash trading” to fraudulently attract investors to purchase the token. During several videoconferences between July and August 2024, a CLS Global employee explained that the company could “help with volume generation” so that NexFundAI could meet cryptocurrency exchange listing requirements and attract purchasers of the NexFundAI token. The employee explained that CLS Global used an algorithm that “basically does self-trades, buying and selling. . . from multiple wallets so it’s not visible” and so “it looks like organic buying and selling that is happening.” The employee further explained, “It’s very hard to track. . . . We’ve been doing that for many clients.” The employee also acknowledged, “I know that it’s wash trading and I know people might not be happy about it.”

CLS Global’s employee provided a “Market Making proposal” which, in a section titled “Volume Support,” contained an illustration of the CLS Global “dashboard” that reflected “total volume,” “CLS volume” and “external volume.” Traders employed by CLS Global subsequently bought and sold the NexFundAI token on the Uniswap cryptocurrency exchange using CLS Global’s trading wallets and provided reports on the trading activity created by the “volume generation algorithm.”

As part of its sentence, CLS Global is prohibited from participating in cryptocurrency transactions on trading platforms available to investors located in the United States or providing services to cryptocurrency clients based in the United States, as set forth in the plea agreement. CLS Global is also required to make annual certifications that its business practices conform to these prohibitions.

Unregulated UAE based Cryptocurrency Financial services admits to fraud

Unregulated UAE based Cryptocurrency Financial services admits to fraud

UAE based but unregulated, Cryptocurrency financial services firm CLS Global, has pleaded guilty to charges stemming from a U.S. undercover operation targeting fraud in the crypto sector. USA federal prosecutors announced that CLS will admit to manipulating the market for a digital token created at the FBI’s direction.

The investigation, known as “Operation Token Mirrors,” was the FBI’s first attempt to create its own digital token and a fake cryptocurrency company as part of a broader strategy to identify fraudsters in the crypto market. CLS is one of three market makers and 15 individuals charged last year by federal prosecutors in Boston as a result of the probe.

In court filings, CLS acknowledged providing illicit services to the FBI-backed NexFundAI token, which ran on the Ethereum blockchain. Prosecutors said the firm engaged in wash trading—sham transactions intended to artificially boost the token’s trading volume and price.

Under the terms of the plea agreement, CLS will plead guilty to two fraud-related counts, pay $428,059 in penalties, and withdraw from cryptocurrency transactions involving U.S. investors. The company will also be required to certify its business practices annually and agreed to settle civil charges brought by the U.S. Securities and Exchange Commission.

Filipp Veselov, CEO of CLS Global, stated, “We recognize that there may be areas where we can improve our processes, and we are open to constructive dialogue with regulatory authorities.” The company added that it actively works to restrict engagement with U.S. clients.

This case is part of a broader DOJ crackdown on crypto market manipulation, with other firms like CLS Global, and ZM Quant also facing accusations of inflating token volumes. These firms allegedly engaged in similar practices, making tokens appear more active and valuable than they were, often selling them at inflated prices to outside investors.

Dubai authorities broke up two major money laundering operations

This comes as Dubai authorities, in collaboration with key federal authorities, have successfully broken up two major international networks conducting money-laundering operations worth a total of $174 million (AED641 million). The Dubai Public Prosecution referred an Emirati national, 21 British nationals, two Americans, a Czech national, and two companies owned by the Emirati national to the Criminal Court of First Instance at Dubai Courts. The individuals and entities face charges of possessing illicit funds of AED461 million as well as forgery of official documents and their use.

In another successful operation, a collaboation between Dubai Economic Security Centre and the Public Funds Prosecution in Dubai disrupted an international organized crime network involved in money laundering operations worth $49 million (AED180 million) using cryptocurrencies. The Dubai Public Prosecution has referred the case involving a network of 30 individuals and three companies to the Money Laundering Court at Dubai Courts. The network, which conducted complex money laundering operations worth AED180 million using cryptocurrencies, operated across the UK and Dubai. Investigations revealed that the network laundered cash in the UK through unlicensed cryptocurrency intermediaries present in the UK and Dubai.

The accused, identified as two Indian nationals and one British national, orchestrated the scheme, which included proceeds from illegal activities such as drug trafficking, fraud, and tax evasion in the UK. A meticulously planned operation led to the arrest of the accused and the freezing of bank accounts used for money laundering activities.

The success of these complex operations was made possible through the combined efforts of the Public Funds Prosecution in Dubai, Dubai Economic Security Centre, Dubai Police’s Anti-Money Laundering Unit, the UAE Financial Intelligence Unit, Dubai Customs, and the International Cooperation Department at the UAE Ministry of Justice.

His Excellency Essam Issa Al Humaidan, Attorney General of Dubai, commended the Public Prosecution, law enforcement agencies, and partnering local and federal agencies for conducting coordinated meticulous investigations that led to the successful dismantling of the sophisticated international money laundering networks. He underscored the significance of these efforts in tackling complex financial crimes, protecting the national economy, and enhancing financial stability. His Excellency reaffirmed Dubai’s commitment to enforcing anti-money laundering laws, combating organized financial crime, and strengthening international cooperation to uphold global financial integrity.

Dubai Police succeed in addressing 500 money laundering cases

Dubai Police successfully addressed 500 money laundering cases from 2022 to 2024, underscoring their vital role in the UAE’s efforts to combat organized and transnational crime. Working closely with international law enforcement agencies, these efforts have led to investigations involving over AED 4 billion, including $16 million (AED 60 million )in virtual assets.

Lieutenant General Abdulla Khalifa Al Marri, Commander-in-Chief of Dubai Police, highlighted that these accomplishments reflect the UAE’s ongoing commitment to fighting money laundering and strengthening global partnerships to tackle financial crimes.