Founder of Crypto Market Maker MyTrade Fined, Avoids Prison for Wash Trading Scheme
The founder of cryptocurrency market maker MyTrade has been fined $10,000 and spared prison time for operating a wash trading service that artificially inflated daily trading volumes for approximately 60 cryptocurrencies, generating millions of dollars in fake activity.
Liu Zhou, 41, a Canadian and Chinese national, received his sentence in Boston federal court on Thursday from U.S. District Judge Angel Kelley, who opted against imposing a custodial sentence, according to Law360. Zhou had previously pleaded guilty to conspiracy to commit market manipulation and wire fraud. He was indicted in October 2024 along with 17 other individuals and entities.
MyTrade openly marketed its wash trading service. Clients accessed a dashboard on the MyTrade MM website, where they could specify the number of wash trades they wished to execute daily on designated exchanges. This product was branded by the firm as “Volume Support.” Automated bots then carried out these trades, repeatedly buying and selling the same asset to artificially boost its apparent trading volume. As of October 2024, the service had dozens of clients.
Zhou was reportedly transparent with individuals he believed to be potential customers. He explained that MyTrade MM “does self-trades — a buy and a sell in the same second,” and that its volume bot could be utilized for pump-and-dump schemes. His stated objective was to attract “other buyers from the community, people you don’t know about or don’t care about,” because, as he put it, “we have to make [the other buyers] lose money in order to make profit.”
Investigators orchestrated a sting operation by creating NexFundAI, a fabricated cryptocurrency company complete with a website and an Ethereum-based token that traded on Uniswap. Law enforcement disabled the token after using the fictitious entity to solicit market-making services and record the offers made.
This operation led to charges against 18 individuals and entities in October 2024, including market makers Gotbit, ZM Quant, and CLS Global.
As part of Zhou’s plea agreement, MyTrade MM was compelled to cease offering Volume Support and permanently deactivate the associated bots. The firm was also required to publish a notice on its website stating that volume support constitutes “a form of wash trading and illegal under the laws of the United States.”
Leave a Reply