Liu Zhou, founder of MyTrade, has been fined $10,000 for running a wash trading scheme impacting 60 cryptocurrencies.
Overview
- Liu Zhou, MyTrade's founder, has been fined $10,000 for facilitating wash trading.
- In October 2024, Zhou pled guilty with 17 others related to market manipulation.
- MyTrade allowed clients to perform fictitious trades via automated bots.
Liu Zhou, the 41-year-old founder of the cryptocurrency market-making firm MyTrade, has been penalized with a $10,000 fine due to his role in a wash trading operation that artificially inflated trading volumes for around 60 cryptocurrencies. Fortunately, he has avoided jail time.
During a sentencing hearing on Thursday in Boston, U.S. District Judge Angel Kelley imposed the fine after Zhou admitted to conspiracy charges involving market manipulation and wire fraud. This admission came after he and 17 co-defendants were charged in October 2024.
MyTrade was designed to transparently facilitate wash trading, offering clients a dashboard on its website to select desired trading volumes on various exchanges. This service, known as "Volume Support," employed bots to create false trading activity by repeatedly executing buy and sell orders for the same assets. By October 2024, the service had attracted a significant number of users.
Zhou openly communicated the nature of MyTrade's operations to potential clients, acknowledging that the platform engaged in self-trading—simultaneously executing buy and sell orders. He indicated that the volume bot could be used for pump-and-dump schemes, which misled buyers into incurring losses for the sake of profit. "We have to make [the other buyers] lose money in order to make profit," he noted.
FBI Investigation
To investigate the activities surrounding MyTrade, authorities created a fake crypto company called NexFundAI, which included a website and an Ethereum-based token traded on Uniswap until law enforcement stepped in. This ruse was intended to solicit market-making services and document the responses received.
This undercover initiative resulted in charges against 18 individuals and entities in October 2024, including several other market makers like Gotbit, ZM Quant, and CLS Global.
As part of his plea agreement, Zhou is required to halt the sale of Volume Support and dismantle the associated bots. Furthermore, MyTrade must post a notice on its website indicating that volume support is considered "a form of wash trading and illegal under U.S. law."
