Liu Zhou fined $10K for wash-trading 60 cryptos

A New York judge has fined Liu Zhou, the founder of MyTrade, $10,000 for running bots that wash-traded 60 cryptocurrencies to trick other investors. The scheme ran between January 2021 and April 2022, artificially inflating trading volumes to lure real buyers into overpriced positions.

Wash trading is illegal in traditional markets because it creates fake demand. In crypto, where transparency is patchy, the practice lets insiders appear more active than they are. Zhou told undercover agents the goal was to drive prices up so unsuspecting traders would buy at inflated levels, letting the bots exit before the market corrected. Regulators see it as a modern twist on an old scam, but harder to spot in decentralized systems.

The U.S. Department of Justice said the bots generated over 60 million wash trades, totaling roughly $7 million in artificial volume across 60 tokens on MyTrade’s exchange. Investigators used undercover agents who posed as traders and recorded Zhou admitting the plan. The $10,000 fine reflects the relatively small size of the exchange at the time, but officials stressed it sets a precedent for holding founders accountable even in fast-moving crypto markets.

The case highlights the growing scrutiny of crypto exchanges that claim to be “decentralized” or “non-custodial” while still hosting wash trading. MyTrade has since rebranded and says it now complies with U.S. financial rules. The DOJ is still pursuing civil penalties and may seek restitution for harmed traders. The ruling signals that even small-scale manipulation won’t go unpunished in a market regulators are racing to police.