MyTrade's founder pleaded guilty to charges include market manipulation.
Another of the accused firms, CLS Global, said it's trying to start a "dialogue" with U.S. authorities.

The U.S. Department of Justice said it secured a guilty plea from the operator of crypto "market maker" MyTrade, which was one target in a wide-ranging sting that brought manipulation charges to multiple firms and individuals earlier this month.

Liu Zhou, 39, said to be from China and Canada, will be sentenced early next year in federal court for "the wash trading of client cryptocurrencies across multiple cryptocurrency exchanges," according to the DOJ. Wash trading refers to the artificial driving up of asset prices by suggesting a fake level of transaction interest.

According to federal charging documents unsealed a few weeks ago, Gotbit, CLS Global and ZM Quant were also among those that allegedly wash traded various tokens to make it seem they had more legitimate activity than they actually did, selling some of these tokens at "artificially inflated prices" to others.

Read More: It Takes a Fake Token to Catch a Volume Faker

The Justice Department said Zhou's operation, commonly known as MyTrade MM, told people it
“does self-trades — a buy and a sell in the same second,” and that its volume bot could do “pump and dumps.” Zhou also allegedly said his firm's intent was to locate “other buyers from the community, people you don’t know about or don’t care about,” because the buyers have to be made to lose money to turn a profit on the tokens.

Meanwhile, another of the firms, CLS Global, said it's reached out to U.S. authorities to cooperate.

"We recognize that there may be areas where we can improve our processes, and we are open to constructive dialogue with regulatory authorities," CEO Filipp Veselov said in a statement that noted his company tries to block engagement with "U.S. clients, entities, or users."

Regulations Wash Trading Department of Justice criminal activity

Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor on the Global Policy and Regulation team, based in Washington, D.C. Before joining CoinDesk in 2022, he worked for more than a decade covering Wall Street regulation at Bloomberg News and Businessweek, writing about the early whisperings among federal agencies trying to decide what to do about crypto. He’s won several national honors in his reporting career, including from his time as a war correspondent in Iraq and as a police reporter for newspapers. Jesse is a graduate of Western Washington University, where he studied journalism and history. He has no crypto holdings.