$2,000,000,000 Worth of Crypto Wash Trading on Ethereum-Based Decentralized Exchanges, Says Surveillance Firm

A crypto surveillance agency says that billions of {dollars} in faux market quantity are flowing by decentralized exchanges (DEXs) on Ethereum (ETH).

In a brand new report, Solidus Labs says crypto token deployers and liquidity suppliers have wash traded at the least $2 billion price of crypto belongings on Ethereum-based DEXs since 2020.

Wash buying and selling entails entities shopping for and promoting an asset on the similar value from themselves to artificially inflate the buying and selling quantity and appeal to extra investments and liquidity

In line with Solidus, 67% of the roughly 30,000 DEX liquidity swimming pools it analyzed have been manipulated by wash merchants. Wash buying and selling additionally constitutes 16% of the entire buying and selling quantity within the manipulated swimming pools, which the agency says is a lower-bound estimate given the dimensions of the pattern reviewed.

“In DeFi, the fragmentation of liquidity throughout numerous DEXs makes for smaller markets which can be extra vulnerable to cost and quantity manipulation.”

The report says a gaggle of linked wallets wash-traded the meme token ShibaFarm to draw speculators. The wash merchants ultimately rug-pulled the traders and made a revenue of over $2 million.

Solidus Labs founder and chief govt Asaf Meir says you will need to handle wash buying and selling in crypto amid rising institutional curiosity and elevated scrutiny from regulators.

“The wash buying and selling exercise we’ve got unearthed here’s a clear signal of market manipulation, and it have to be prevented for crypto and DeFi to flourish.”

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