BOSTON – The founder and main operator of “MyTrade,” a monetary providers agency recognized within the cryptocurrency business as a “market maker,” pleaded responsible at this time in federal court docket in Boston for his function in a wide-ranging conspiracy to manipulate cryptocurrency markets on behalf of shopper cryptocurrency corporations.
Liu Zhou, 39, of China and Canada, pleaded responsible at this time to conspiracy to commit market manipulation and wire fraud. U.S. District Court docket Choose Angel Kelley scheduled sentencing for Feb. 27, 2025.
MyTrade offered monetary providers to cryptocurrency shoppers by way of its “MyTrade MM” web site and on-line software. These providers included the wash buying and selling of shopper cryptocurrencies throughout a number of cryptocurrency exchanges. Wash buying and selling happens when a single dealer, or a quantity of merchants working in coordination, purchase and promote the identical asset repeatedly so as to mislead the market by artificially inflating the buying and selling quantity or value of the asset by way of trades that don’t have any lawful business function. Wash buying and selling is a type of fraud supposed to stimulate curiosity in an asset and is particularly prohibited by the securities legal guidelines. MyTrade MM’s shoppers had entry to a dashboard obtainable by way of MyTrade MM’s web site that allowed shoppers to specify the specified quantity of each day wash trades—a service described as “Quantity Assist”—on recognized cryptocurrency exchanges. MyTrade MM used pc packages often called “bots” to generate the fraudulent wash trades for shoppers.
MyTrade MM’s illegal wash buying and selling service was recognized by way of an undercover law enforcement operation. The investigation included the creation of NexFundAI, a purported cryptocurrency firm that had a web site (https://nexfundai.com) and an Ethereum-based token that traded on the Uniswap cryptocurrency alternate earlier than being disabled by legislation enforcement.
In discussions with purported NexFundAI promoters, Zhou described how MyTrade MM “does self-trades – a purchase and a promote in the identical second,” and that its quantity bot can be utilized to execute “pump and dumps.” Zhou additionally described the “goal” as discovering “different consumers from the neighborhood, folks you don’t find out about or don’t care about” as a result of “we’ve got to make [the other buyers] lose cash so as to make revenue.” As of Oct. 1, 2024, MyTrade MM was offering the “quantity assist” operate – which consisted of wash trades made by buying and selling bots – to dozens of shoppers.
As half of Zhou’s plea, MyTrade MM was required to stop offering “Quantity Assist” providers and to completely deactivate its wash buying and selling bots, which had been answerable for tens of millions of {dollars}’ price of each day wash trades for roughly 60 totally different cryptocurrencies. MyTrade MM was additionally required to add the next disclaimer to its web site: “Quantity assist is a type of wash buying and selling and unlawful underneath the legal guidelines of the US.”
The cost of conspiracy to commit market manipulation and wire fraud supplies for a sentence of up to 5 years in jail, up to three years of supervised launch, a fantastic of up to $250,000 to twice the gross acquire or loss from the offense, restitution and forfeiture. Sentences are imposed by a federal district court docket decide based mostly upon the U.S. Sentencing Pointers and statutes which govern the dedication of a sentence in a prison case.
Appearing United States Legal professional Joshua S. Levy and Jodi Cohen, Particular Agent in Cost of the Federal Bureau of Investigations, Boston Division made the announcement. Assistant U.S. Attorneys Christopher J. Markham and David M. Holcomb of the Securities, Financial & Cyber Fraud Unit prosecuted the case.
