Wash Trading Will Be Next Crypto Implosion: Mark Cuban.
Mark Cuban, the Dallas Mavericks owner, believes that crypto token wash trading on centralized exchanges will lead to the next crypto implosion. The crypto investor said 2023 will not be short of crypto scandals.
Cuban highlighted that the next biggest thing to impact the industry will be the discovery and removal of wash trades on central exchanges. He said there are millions of dollars in trades and liquidity for tokens that have very little use. Wash trading is not lawful in the United States. It’s a process whereby a trader or bot buys and sells the same crypto asset to feed misleading information to the market. Wash trading artificially inflates volumes for retail traders to get on and push prices up. In other words, this is like a pump-and-dump scheme.
The billionaire said it’s just a prediction and he doesn’t have any specifics to support this. Mati Greenspan, Quantum Economics CEO, and former eToro senior market analyst, highlighted that 42% of all NFT volume is wash traded. He said the process could be used to harvest tax losses and make it look like there has been a greater loss than in reality.
Moreover, a report by the National Bureau of Economic Research in December said 70% of the volume on unregulated exchanges is wash trading. And a 2022 study by Forbes outlined that half the Bitcoin trade volumes were fake.