Wash trading will cause crypto’s next implosion: Mark Cuban

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 January 5th, the billionaire investor believes there will be no shortage of crypto scandals in 2023, following a series of debacles that rocked 2022. rice field.

Cubans who have backed several cryptocurrencies Web3 He believes the next biggest thing to affect the industry will be the “discovery and removal of wash trades on central exchanges.”

“There are probably tens of millions of dollars in trading and liquidity in tokens that are largely underutilized,” he said. Said “I don’t know how it can be so liquid,” he added before adding.

Mark Cuban has backed several cryptocurrency startups.Source: American Broadcasting Corporation

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 said he was just speculating, adding: “I don’t have concrete information to support my speculation.”

as much as possible 70% of volume Trading on unregulated exchanges is wash trading, according to a December report by the National Bureau of Economic Research (NBER).

Researchers used statistical and behavioral patterns to determine which transactions were legitimate and which were fake.

Additionally, 2022 study According to Forbes of 157 centralized exchanges, more than half of Bitcoin trading volume is fake.

Related: Mark Cuban to Bill Maher: “If you have money, you’re fucking stupid. Get Bitcoin.”

Wash trading is not limited to centralized exchanges, however. On January 5, Matty Greenspan, CEO of Quantum Economics and former eToro senior market analyst, said: NFT volume is wash traded.

He added that wash transactions are also used to: harvest tax lossto make it appear (to the tax officer) that there was a bigger loss than it actually was.