MyTrade founder admits to fraud in Boston court

The founder of cryptocurrency firm MyTrade, Liu Zhou, pleaded guilty in Boston federal court on Wednesday to charges of market manipulation and wire fraud. Zhou, who described himself as the ‘mastermind’ behind the company, entered the plea just weeks after being indicted along with 14 others as part of a groundbreaking FBI investigation dubbed ‘Operation Token Mirrors.’ This operation was notable for involving the creation of a digital token by the FBI itself to uncover fraud in the crypto sector.

Prosecutors revealed that MyTrade was one of three market makers involved in providing illicit trading services to cryptocurrency firms. During the investigation, Zhou agreed to manipulate the market for a token backed by the FBI, known as NexFundAI, which operates on the Ethereum blockchain. As part of a plea agreement, Zhou faces a maximum prison sentence of 1.5 years and must refrain from appealing if sentenced within that timeframe. Additionally, MyTrade must stop facilitating fraudulent trades that had previously manipulated the trading volumes of about 60 cryptocurrencies.

Zhou founded MyTrade in 2021, a British Virgin Islands-registered company that offered services like ‘volume support,’ where automated bots were used to inflate trading volumes. Prosecutors characterised this practice as ‘wash trading,’ which artificially boosts an asset’s trading activity. Zhou’s discussions with NexFundAI promoters included plans for market manipulation and ‘pump and dump’ schemes. Following a meeting on 23 September, Zhou quickly agreed to plead guilty after the FBI approached him. Four others involved in the investigation have also pleaded guilty.