The US state of Massachusetts is cracking down on illegal cryptocurrency market practices, with a federal court sentencing CLS Global, a UAE-based crypto financial services firm, to a significant fine. The court fined CLS Global $428,059 and prohibited them from operating in the US for three years following their guilty plea on charges related to fraudulent manipulation of crypto trading volume.
A US Attorney’s Office announcement detailed that CLS Global manipulated the FBI’s “trap token” NexFundAI. The company agreed to participate in a fraudulent scheme designed to attract investors into purchasing the token while taking advantage of an undercover law enforcement operation involving NexFundAI, created by the FBI for investigation purposes.
In October 2024, the Securities and Exchange Commission (SEC) charged CLS Global and its employee Andrey Zhorzhes with fraud. The SEC also filed separate complaints against two other firms involved in manipulating NexFundAI: Hong Kong-based ZM Quant Investment and Russia-linked Gotbit Consulting.
The case against CLS Global highlights the ongoing concerns about wash trading in the cryptocurrency market, which involves artificially inflating trading volume by repeatedly buying and selling the same asset. A January 2025 report by Chainalysis estimated at least $2.6 billion in crypto wash trade volumes, representing approximately 2% of total daily trading volumes.
Furthermore, research suggests that illegal wash trading may constitute a larger proportion of trading volume than previously thought. The National Bureau of Economic Research reported that illegal wash trading may account for as much as 70% of average trading volumes on unregulated exchanges in 2022.