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Regulators in Massachusetts have taken a firm stance against wash trading, with CLS Global—a United Arab Emirates-based crypto market maker—facing the consequences.
A Boston federal court on April 2 sentenced the firm for its role in manipulating crypto trading volume, imposing a $428,059 fine and barring it from operating in the U.S. for three years.
The ruling follows CLS Global’s guilty plea in January to conspiracy to commit market manipulation and wire fraud. The company was caught artificially inflating trading volumes to mislead investors—a tactic known as wash trading, which remains a persistent issue in crypto markets.
FBI’s ‘Trap Token’ Exposes CLS Global’s Role in Fraud
The case against CLS Global stemmed from an undercover FBI operation that deployed NexFundAI, a fake token designed to lure fraudulent market makers. Launched in May 2024, NexFundAI attracted at least three companies willing to manipulate its trading activity, including CLS Global.
By October 2024, the SEC had filed fraud charges against CLS Global and its employee Andrey Zhorzhes, along with two other firms: Hong Kong-based ZM Quant Investment and Russia-linked Gotbit Consulting.
The coordinated effort underscores U.S. regulators’ increasing scrutiny of crypto market makers engaging in deceptive practices.
CLS Global, which was founded in 2017, originally positioned itself as a firm addressing a gap in the market for high-quality trading consulting. Its CEO, Filipp Veselov, previously worked at Latoken, a controversial exchange that has drawn criticism for its operations.
Additionally, its chief revenue officer, Pavel Singaevskii, was formerly with Stex, a crypto platform that abruptly shut down in 2023, leaving users stranded.
Despite the charges and restrictions in the U.S., CLS Global remains operational, with over 110,000 followers on X.
How Deep Does Wash Trading Go?
Wash trading—the act of artificially inflating trading volumes to create a false perception of market activity—has long plagued the cryptocurrency industry. While some estimates suggest that it only accounts for 2% of daily crypto trading volumes, according to Chainalysis’ January 2025 report, other studies paint a far bleaker picture.
A 2022 report by the U.S. National Bureau of Economic Research suggested that as much as 70% of trading activity on unregulated exchanges could be fraudulent wash trades. This persistent issue raises questions about market integrity and the reliability of trading volume metrics across various crypto platforms.
With authorities ramping up enforcement, cases like CLS Global’s highlight the growing pressure on crypto firms to operate transparently—or face serious legal consequences.
