According to billionaire Dallas Mavericks owner and crypto investor Mark Cuban, the next crypto “implosion” will be brought on by crypto token wash trade on centralized exchanges. The multi-billionaire investor predicted that after the multiple controversies that rocked 2022, 2023 would not be short of crypto scandals.
The next major development in the business, according to Cuban, who has invested in multiple Web3 and cryptocurrency startups, will be “the identification and eradication of wash trades on central exchanges.” In order to provide false information to the market, a trader or automated program engages in wash trading, which is prohibited under U.S. law.
The intention is to artificially exaggerate volumes in order to encourage retail traders to join the trend and raise prices. It’s basically a pump-and-dump strategy. According to a December report by the National Bureau of Economic Research (NBER), wash trading accounts for up to 70% of the volume on unregulated exchanges.
To distinguish between real and fraudulent transactions, researchers examined statistical and behavioral indicators. Furthermore, more than half of the Bitcoin trading volumes were false, according to a 2022 Forbes analysis on 157 controlled exchanges. However, wash trading is not solely restricted to centralized exchanges. According to Mati Greenspan, CEO of Quantum Economics and a former senior market analyst for eToro, 42% of all NFT volume is wash traded as of January 5.
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