MyTrade Founder Pleads Guilty in Crypto Manipulation Case

TLDR

• MyTrade founder Liu Zhou pleads guilty to manipulating the crypto market
• Wash trading bots were used to artificially inflate trading volumes
• He faces a maximum sentence of 5 years in prison, with a sentencing date of 2025.
• MyTrade’s “Volume Support” service handles millions of fraudulent transactions every day
• Major firms like Jane Street and Jump Crypto reduce US crypto operations

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Liu Zhou, founder of cryptocurrency market maker MyTrade pleads guilty to orchestrating a large-scale market manipulation scheme Processing millions of fraudulent transactions every day.

The lawsuit, filed in Massachusetts federal court, reveals how Zhou used automated trading bots to generate fraudulent trading activity and mislead investors.

According to court documents, Zhou’s company offered a service called “Volume Support” that used wash trading to artificially increase trading volumes of certain cryptocurrencies.

Wash trading involves buying and selling the same asset repeatedly to create the illusion of market activity.

Deputy prosecutors explained that Zhou’s scheme worked by programming bots to execute numerous trades back and forth, often doubling or tripling apparent trading activity for client cryptocurrencies.

These artificial transactions have caused some digital assets to appear more popular and are actively traded than they actually are.

“Zhou’s tactics created the illusion of market demand and misled investors who believed they were seeing genuine interest in these digital assets,” Assistant U.S. Attorney Rachel Lahey said during the proceedings.

The prosecution revealed how MyTrade’s activities directly affected market perception and investor behavior.

The case highlighted a broader problem of market manipulation in cryptocurrency trading. Six months before Zhou pleaded guilty, another market maker, DWF Labs, faced similar accusations when the Wall Street Journal reported allegations of $300 million worth of fraudulent trading on Binance. DWF Labs denied these claims.

U.S. Attorney Rachael Rollins emphasized The breach of trust inherent in Zhou’s actions.

“Traders trust the reliability of MyTrade without realizing that what they see is a planned illusion.”

he stated during court proceedings.

The prosecution team presented evidence showing how MyTrade’s Volume Support service systematically deceived market participants.

The criminal complaint comes at a time when the cryptocurrency industry is facing increased scrutiny from regulators and law enforcement.

Zhou’s guilty plea marks one of the first major convictions for fraudulent trading in the cryptocurrency space.

Court records reveal MyTrade’s fraudulent trading operation was sophisticated and widespread. The company’s automated systems could process millions of transactions per day, creating an artificial appearance of market depth and liquidity where little actually existed.

The impact of this type of manipulation extends beyond individual investors. Market analysts note that artificial trading volumes can disrupt price discovery mechanisms and create false impressions about market trends, affecting the entire cryptocurrency ecosystem.

Zhou’s activities took place during a period of rapid growth in the cryptocurrency market, with many new investors entering the field.

The prosecution argued that his actions took advantage of an influx of new market participants who may not have fully understood the signs of market manipulation.

This coincided with changes in the broader crypto trading landscape. Major market makers Jane Street and Jump Crypto have scaled back their cryptocurrency operations in the US, citing regulatory uncertainties. Jane Street has completely withdrawn from crypto trading in the United States.

Following the investigation, MyTrade’s Volume Support service was shut down. Prosecutors detailed how the service allowed customers to set desired trading volumes and that MyTrade’s systems produced enough wash transactions to meet those goals.

The confession to the crime carries serious consequences for Zhou, who now faces up to five years in prison. Sentencing is scheduled for February 2025; where a federal judge will determine the final sentence based on sentencing guidelines and other factors.

Law enforcement officials stated that this case represents part of their ongoing efforts to protect market integrity.

“We are committed to rooting out market manipulation at every level,” Rollins said, noting that similar cases may be under investigation.

The latest development in this case is Zhou’s criminal complaint filed in Massachusetts federal court. Details of the plea agreement are being kept secret, but prosecutors confirmed Zhou admitted to both market manipulation and fraud conspiracy.