The U.S. Department of Justice announced a guilty plea from Liu Zhou, the founder of crypto market-making firm MyTrade, for charges related to market manipulation.
Zhou, 39, admitted to engaging in “wash trading” — the practice of artificially inflating asset prices by executing simultaneous buy and sell orders to create the illusion of high trading volume. His sentencing is set for early next year.
Zhou’s operation, known as MyTrade MM, allegedly misled clients by executing self-trades and running “pump and dump” schemes, manipulating token prices and misleading buyers into investing at inflated values. Zhou reportedly said that the firm’s aim was to “locate other buyers from the community” and profit off unsuspecting investors.
This 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. These firms allegedly engaged in similar practices, making tokens appear more active and valuable than they were, often selling them at inflated prices to outside investors.
One of the accused firms, CLS Global, responded by reaching out to U.S. authorities and claimed that it plans to improve its processes. Filipp Veselov, CEO of CLS Global, stated, “We recognize that there may be areas where we can improve our processes, and we are open to constructive dialogue with regulatory authorities.” The company added that it actively works to restrict engagement with U.S. clients.
The SEC also accused in 2023 Sigma Chain, a trading firm owned and controlled by Binance founder CZ, of engaging in wash trading on the platform of its US-based affiliate. This involved artificially inflating the trading volume of crypto asset securities, creating a misleading perception of market activity to mispresent the liquidity on Binance.US.
