U.S. Court Sentences MyTrade Founder Over Crypto Wash Trades

A U.S. federal court has sentenced the founder of crypto market-making firm MyTrade in a case that prosecutors say exposed a business built around artificially inflating cryptocurrency trading volumes.

According to the U.S. Department of Justice (DOJ) release, Liu Zhou, a 41-year-old Canadian citizen and Chinese national, was ordered to pay a $10,000 fine on Thursday after pleading guilty last year to conspiracy to commit market manipulation and wire fraud.

How MyTrade allegedly manipulated trading

Prosecutors allege that MyTrade operated a service known as “Volume Support,” which allowed cryptocurrency projects to purchase artificial trading activity across multiple exchanges.

Instead of matching genuine buyers and sellers, prosecutors said the company used automated trading bots to repeatedly buy and sell the same assets, creating the appearance of active markets without legitimate trading demand. 

According to investigators, roughly 60 cryptocurrency projects were using the service before authorities intervened. The Justice Department alleged that the scheme was designed to make client tokens appear more liquid and actively traded, potentially attracting unsuspecting investors.

Undercover operation led to criminal charges

Federal investigators identified the operation through an undercover FBI investigation involving NexFundAI, a fictitious cryptocurrency project created to identify firms offering market manipulation services. According to prosecutors, Zhou described how MyTrade’s software executed self-trades and discussed strategies commonly associated with pump-and-dump schemes.

In one conversation cited in court filings, Zhou allegedly said, “We have to make the other buyers lose money in order to make profit.” Those conversations later formed part of the criminal case against Zhou.

Wash trading remains a regulatory focus

Wash trading has become a growing focus for regulators because it can create a false impression of market activity by inflating trading volumes and liquidity. Authorities argue that such practices can distort price discovery and mislead investors about the genuine demand for a digital asset.

As part of his guilty plea, Zhou agreed to shut down MyTrade’s volume-generation service and permanently deactivate the automated bots used to execute the wash trades. 

The company was also required to publish a notice on its website stating that its former “Volume Support” service constituted wash trading and is illegal under U.S. law.

Wider crypto-related crackdown

The case is one of several recent cryptocurrency-related prosecutions announced by federal authorities.

Earlier in July, authorities in the United States, the United Kingdom, and the European Union coordinated sanctions against cryptocurrency wallets and infrastructure allegedly linked to the TrickBot cybercrime network as part of efforts to disrupt ransomware financing and illicit crypto flows.

A day ago, the U.S. Department of Justice also charged Few and Far founder Taj Tarsha with allegedly defrauding investors of more than $10 million. Prosecutors said Tarsha raised funds for an NFT marketplace but instead used much of the money for gambling, cryptocurrency trading, luxury purchases, and personal expenses. He has been indicted on securities fraud and wire fraud charges and is presumed innocent unless proven guilty in court.

Taken together, the recent actions suggest enforcement agencies are widening their focus across the crypto ecosystem, targeting not only fraud and illicit finance but also trading practices that regulators believe undermine market integrity.

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