Cryptocurrency firm founder pleads guilty to fraud after novel FBI probe
Adds comment from defense lawyer, further details on plea deal in paragraphs 5-6
By Nate Raymond
BOSTON, Oct 30 (Reuters) -The founder of a cryptocurrency financial services firm pleaded guilty on Wednesday to engaging in a scheme to manipulate the market for digital tokens, including one created at the FBI's behest to help ferret out fraud in the crypto sector.
Liu Zhou, the self-described "mastermind" behind cryptocurrency firm MyTrade, pleaded guilty in Boston federal court to conspiring to commit market manipulation and wire fraud, just three weeks after authorities announced charges against him, 14 other people and three companies following a novel investigation into the crypto sector.
The probe, dubbed "Operation Token Mirrors," marked the first time the FBI directed the creation of its own digital token, as well as a fake cryptocurrency company to help bait and catch fraudsters in the market.
Prosecutors said MyTrade was one of three so-called market makers that offered illicit trading services to cryptocurrency companies and, during the sting operation, agreed to help manipulate the market for FBI-backed NexFundAI's token, which operated on the Ethereum blockchain.
As part of a plea deal, Zhou, 39, agreed to not appeal any prison sentence of 1-1/2 years or less. MyTrade, which remains in operation, was also required to cease providing services that had previously enabled millions of dollars worth of daily sham trades for about 60 cryptocurrencies, prosecutors said.
"Notwithstanding the charges to which Mr. Zhou is seeking to speedily resolve, he has always endeavored to offer lawful services that are in compliance with any governing regulations," Jason Benzaken, his lawyer, said in a statement.
Zhou, who lives in China and Canada, in 2021 founded MyTrade, a British Virgin Islands-registered firm that offered trading-related services to dozens of cryptocurrency companies, including "volume support," in which bots could be used to manipulate the trading volume of their tokens.
Prosecutors in court papers called that a form of "wash trading," a type of sham trading designed to artificially inflate an asset's trading volume or price.
During virtual and in-person meetings in September with purported NexFundAI promoters, Zhou discussed how MyTrade's bots could be used for purposes including "pump and dumps", and discussed a plan to manipulate the market for its token.
The FBI approached Zhou following the last of those meetings on Sept. 23 and within a week he had agreed to plead guilty, prosecutors said. Four other people caught up in the investigation likewise have pleaded guilty.
Reporting by Nate Raymond in Boston, Editing by Alexia Garamfalvi, David Holmes and Jamie Freed
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.
