A federal court in Boston has fined MyTrade founder Liu Zhou $10,000 after he admitted participating in a conspiracy tied to crypto market manipulation. Prosecutors said Zhou’s platform used automated bots to create artificial trading activity for dozens of tokens, making markets appear more active than they really were.
Zhou, 41, identified in court filings as a Canadian citizen and Chinese national, pleaded guilty to conspiracy to commit market manipulation and wire fraud. The sentence was imposed by U.S. District Judge Angel Kelley.
How MyTrade’s service worked
According to prosecutors, MyTrade operated as a crypto market-making platform through its MyTrade MM website and application. One of its offerings, called “Volume Support,” let token projects choose how much daily trading activity they wanted to appear on specified exchanges.
Authorities said the service relied on bots that repeatedly bought and sold the same cryptocurrencies. Those transactions were designed to manufacture trading volume and apparent market interest rather than serve a legitimate commercial purpose, fitting the definition of wash trading described in the case.
Undercover token operation led to the case
U.S. authorities said they uncovered the activity through an FBI undercover operation centered on NexFundAI, a fake crypto company created by law enforcement. Investigators launched a website and an Ethereum-based NexFundAI token, which traded on Uniswap before authorities disabled it.
While posing as promoters of the project, undercover agents contacted market makers. During conversations cited by prosecutors, Zhou described MyTrade’s approach as simultaneous purchases and sales of the same asset in the same second. He also said the company’s volume bot could carry out “pump and dumps,” according to the government’s account of the discussions.
Charges, plea and scope of the trading
Federal prosecutors charged Zhou in October 2024 alongside 17 alleged co-conspirators. He later pleaded guilty to conspiracy to commit market manipulation and wire fraud.
The Justice Department said MyTrade was still providing its Volume Support service to dozens of clients as of Oct. 1, 2024. Prosecutors further alleged that the bots generated millions of dollars in daily wash trades involving about 60 cryptocurrencies.
What MyTrade agreed to do next
As part of Zhou’s guilty plea, MyTrade agreed to stop offering the Volume Support product and to permanently deactivate the bots used to create the artificial trades. The company was also required to post a notice on its website acknowledging the legal status of the service.
That notice states that volume support is a form of wash trading and is illegal under U.S. law. The case was prosecuted by the U.S. Attorney’s Office for the District of Massachusetts with assistance from the FBI’s Boston Division, marking another enforcement action focused on deceptive conduct in crypto markets.
Source: crypto.news