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
Berita Terkini
Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
