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Crypto Token Wash Trading on Centralized Exchanges Will Cause the Next Crypto “Implosion,” According to Billionaire Dallas Mavericks Owner and Crypto Investor Mark Cuban .
In an interview with The Street on Jan. 5, the billionaire investor said 2023 would be no shortage of crypto scandals following a string of debacles that rocked 2022.
Cuban, who has backed several cryptocurrency and Web3 startups, said he believes the next biggest thing to impact the industry will be the “discovery and removal of wash trades on central exchanges.” rice field.
“There are probably tens of millions of dollars in transactions and little-used token liquidity,” he added.
Illegal under US law, wash trading is the process by which traders or bots buy and sell the same cryptocurrency to supply misleading information to the market.
The goal is to artificially inflate the volume so that retailers jump on the bandwagon and push prices higher. Essentially, this is a pump-and-dump method.
Cuban added that it was just a prediction and that he “has no concrete information to support my speculation.”
According to a December report by the National Bureau of Economic Research (NBER), 70% of trading volume on unregulated exchanges is wash trade.
Researchers used statistics and behavioral patterns to determine which transactions were legitimate and which were fake.
Additionally, a Forbes study of 157 centralized exchanges in 2022 found that more than half of the Bitcoin trading volume was counterfeit.
Related: Mark Cuban to Bill Maher: “If you have money, you’re an asshole. Get Bitcoin.”
Wash trading is not limited to centralized exchanges, however. On Jan. 5, Matty Greenspan, CEO of Quantum Economics and former senior market analyst at eToro, said 42% of all NFT trading volume is wash trading.
yes. It’s 2023 and we’re still talking about wash trading. https://t.co/y9kiLbu4Eu
— Matty Greenspan (@MatiGreenspan) January 5, 2023
He added that wash trading is also used to make up for tax losses, making it appear (to tax officials) that losses were larger than they actually were.
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