A crypto company has pleaded guilty to laundering tokens created by the FBI
A crypto financial services firm has agreed to plead guilty to US charges of helping manipulate crypto token markets created by the FBI in an effort to detect fraud.
United Arab Emirates-based CLS Global agreed to plead guilty to two counts of manipulating cryptocurrency trading volumes and wire fraud in a January 21 plea deal.
The Massachusetts US Attorney's Office said CLS will pay a $428,059 fine and forfeit all funds held in multiple accounts on crypto exchanges Binance and KuCoin.
CLS was indicted in September after it was seized by the FBI over an AI-related token called NexFundAI (NEXF) that was designed to attract those involved in fraudulent cryptocurrency activity, particularly pump-and-dump schemes.
Source: US Attorney Massachusetts
The FBI asked for help in controlling the token's trading volume by pretending to be fraudsters, deceiving investors that NEXF is more popular than it is.
As part of the plea agreement, CLS admitted to engaging in providing services to NexFundAI tokens, including laundry trading, to fraudulently induce investors to purchase tokens.
According to the agreement, CLS is prohibited from participating in crypto transactions on trading platforms available to investors located in the US and has been placed on probation for three years.
The firm must provide annual certifications to the Securities and Exchange Commission that it is complying with this prohibition.
CLS Global may not provide its services to anyone in the United States as part of the plea agreement. Source: CourtListener
The SEC filed a separate civil suit against CLS in October, alleging violations of securities laws and a separate settlement with the company.
“Funds seized or disbursed from CLS Global will be subject to the SEC's decision,” the district attorney's office said.
Related: Weird but True: 5 Weird and Weird Crypto Stories of 2024
The U.S. Department of Justice announced last October that 18 people are facing charges in connected cases, and that an additional company, MyTradeMM, allegedly provided services to NexFundAI.
The operation is the first public case in which the FBI has used its own digital token and fake crypto company to help catch and arrest fraudsters in the market.
CLS Global did not immediately respond to a request for comment.
Magazine: Legal Issues Surround FBI's Fake Crypto Token Creation
