MyTrade Founder Fined $10K for Wash Trading Practices

MyTrade Founder Fined for Market Manipulation

Liu Zhou, the founder and primary operator of MyTrade, has been fined $10,000 after pleading guilty to conspiracy to commit market manipulation and wire fraud. The sentence was handed down by U.S. District Judge Angel Kelley in a federal court in Boston.

Admittance of Wrongdoing

As part of his guilty plea, Zhou admitted that MyTrade’s market-making platform used automated trading bots to engage in wash trading across approximately 60 cryptocurrencies. This practice artificially inflated the trading volume on the platform.

Details of the Scheme

Federal prosecutors revealed that Zhou’s operations involved simultaneous buy and sell transactions of the same asset, which created the illusion of increased market activity without any legitimate trading purpose. MyTrade’s service included a feature called “Volume Support,” which allowed clients to dictate the level of artificial trading activity on specified exchanges.

FBI Undercover Operation

The investigation into MyTrade was facilitated by an undercover operation involving a fake cryptocurrency, NexFundAI, created by law enforcement. Undercover agents posed as project promoters and engaged with Zhou, who described how MyTrade’s bots executed self-trades rapidly, suggesting that their intent was to mislead other market participants.

Consequences and Future Actions

In addition to the fine, MyTrade has agreed to permanently deactivate the offending trading bots and cease offering its Volume Support service, which was deemed illegal under U.S. law. The firm is also required to publicly acknowledge the legal status of its previous services on its website, making it clear that the practice of wash trading is illegal.

Broader Implications

This case underscores an intensified focus on market manipulation in the cryptocurrency industry. U.S. authorities are taking a stronger stance against misleading practices, with implications for other crypto entities that may engage in similar activities. This scrutiny is part of a wider regulatory effort to ensure integrity within the crypto markets.