A new research report shows that in 2020 the volume of artificial crypto trading due to laundry trades exceeded $6 trillion on exchanges. The study shows that laundry trading remains a "widespread industry problem" in the crypto market.
Wash Trading accounts for more than 70% of crypto exchange volume
More than $6 trillion laundered in fraudulent crypto transactions in the first quarter of 2020 Overall, more than 70% of transaction volume on crypto exchanges came from laundering transactions, according to a survey based on the analysis of crypto market volumes in the second half of 2019.
Spoof trading refers to a manipulative practice in the financial markets in which a trader simultaneously buys and sells the same asset to create the appearance of genuine trading activity. However, without a change in ownership, such a move could mislead other investors and artificially increase trading volume.
According to the research report, US-listed crypto exchange Coinbase showed no signs of laundry trading during this period, Kong said. In 2021, Coinbase, which sued the US Securities and Exchange Commission (SEC) last month, reached a settlement with the Commodity Futures Trading Commission (CFTC) after regulators accused an exchange employee of engaging in laundry trading for six weeks in 2016.
Binance and Binance.US declared laundry trade in 2019
Meanwhile, researchers found that Binance, the world's largest crypto exchange, sold about 46% of its trading volume in 2019. These figures only cover the global exchange Binance, and not the later launched Binance US.
However, the SEC sued U.S. subsidiary Binance and its CEO Changpeng Zhao in June, alleging that Zhao's company controlled increased trading volume on U.S. exchanges. Specifically, the SEC said Binance.US, a Swiss trading firm controlled by Zhao, inflated trading volumes through dozens of Sigma Chain user accounts.
In the complaint, the SEC says that the day after Binance.US launched in September 2019, fraudulent trades between Sigma Chain accounts and accounts held by Zhao and other senior employees accounted for about 70% of the trading volume per token. Since the regulator opened its case, the platform's market share in the United States has fallen to 1%.
This article originally appeared on The Tokenist