MyTrade founder gets $10,000 fine for crypto wash trading conspiracy

Liu Zhou, the self-described founder of crypto market maker MyTrade, was sentenced on August 6 in Boston federal court to pay a $10,000 fine for conspiracy to commit market manipulation and wire fraud. The case marks one of the most closely watched enforcement actions in recent crypto market history.

How the Scheme Worked

According to court documents, Zhou's company offered a service called "Volume Support," which used wash trading to artificially boost the trading volumes of specific cryptocurrencies. The bots had been responsible for millions of dollars worth of daily wash trades for approximately 60 different cryptocurrencies. MyTrade's clients had access to a dashboard through which they specified the desired amount of daily wash trades on identified cryptocurrency exchanges.

Zhou's operation allegedly misled clients by executing self-trades and running "pump and dump" schemes, manipulating token prices and misleading buyers into investing at inflated values. In recorded conversations with undercover agents, Zhou stated that the firm's bots would run pump and dumps and that "we have to make [the other buyers] lose money in order to make profit."

The FBI Sting Behind the Case

The probe, dubbed "Operation Token Mirrors," marked the first time the FBI directed the creation of its own digital token, as well as a fake cryptocurrency company, to help bait and catch fraudsters in the market. The agency launched a fully functional Ethereum-based token called NexFundAI in March 2024, designed from the ground up to lure market manipulators into incriminating themselves.

The scheme came crashing down when FBI agents posing as NexFundAI advisors approached the company with a view to becoming one of its clients. At that point, Zhou revealed that his firm "does self-trades, a buy and a sell in the same second," and executes "pump and dumps."

The operation resulted in 18 individuals and entities being charged with market manipulation, wash trading, and related offenses. Authorities also seized more than $25 million in digital assets and shut down trading bots that had been manipulating prices across roughly 60 different tokens. The case is part of a broader DOJ crackdown on crypto market manipulation, with other firms like Gotbit, CLS Global, and ZM Quant also facing accusations of inflating token volumes.

Zhou had pleaded guilty in October 2024. As part of his plea, MyTrade was required to cease providing "Volume Support" services, permanently deactivate its wash trading bots, and add the following disclaimer to its website: "Volume support is a form of wash trading and illegal under the laws of the United States."

Sources:
U.S. Department of Justice: MyTrade Founder Pleads Guilty to Market Manipulation and Fraud Conspiracy
Protos: Crypto exec admits trying to wash trade FBI's fake NexFundAI token
U.S. News: Cryptocurrency Firm Founder Pleads Guilty to Fraud After Novel FBI Probe