For the billionaire and cryptocurrency investor Mark Cuban, it’s a question of when, not whether.
This new scandal, he says, will appear in the form of the implosion of so-called wash trades, according to him, on the centralized exchanges.
„Manau, kad kitas galimas sprogimas yra plovimo sandorių atradimas ir pašalinimas centrinėse biržose“, – interviu „TheStreet“ elektroniniu paštu sakė Dalaso „Mavericks“ savininkas. „Tariamai yra dešimtys milijonų dolerių sandorių ir likvidumo žetonams, kurių panaudojimas labai mažas. Nesuprantu, kaip jie gali būti tokie skysti.
He cautioned: “I don’t have any specifics to offer to support my guess.”
A wash trade, an illegal practice, consists of creating artificial interest around a financial product — a crypto token or coin in this case — to make a profit. This form of “pump-and-dump” scheme is widespread in the cryptocurrency industry.
Basically, a scammer/trader buys and sells the same tokens, creating artificial trading volumes around that cryptocurrency. The scammer encourages positive social-media comment about the token, giving other traders the impression that the token is popular and in big demand. In turn, that generates more interest in the token, driving up its price. The scammers then liquidate their positions at the peak of demand.
“Wash Trading (is) entering into, or purporting to enter into, transactions to give the appearance that purchases and sales have been made, without incurring market risk or changing the trader’s market position,” sako the The U.S. Commodity Futures Trading Commission.
Bitcoin Is Not Immune From Wash Trades While many wash trades have occurred in traditional finance, the crypto space is particularly conducive to the practice because nearly 13,000 cryptocurrencies are listed, according to data firm „CoinGecko“ . Scammers have to make one or another token stand out from that pack so they can engage in wash trade.
Pavyzdžiui, pagal 2022 m. žurnalo „Forbes“ atliktą 157 centralizuotų kriptovaliutų keityklų tyrimą, daugiau nei pusė bitkoinų mainų yra netikri.
“More than half of all reported prekybos apimties is likely to be fake or non-economic,” the magazine padarė išvadą, , adding that it “estimates the global daily bitcoin volume for the industry was $128 billion on June 14. That is 51% less than the $262 billion one would get by taking the sum of self-reported volume from multiple sources.”
Consider the figures from the various data firms concerning bitcoin trading volumes. At last check, CoinMarketCap puts the latest 24-hour trading volume of bitcoin at $15.8 billion, „CoinGecko“ 17.6 milijardus dolerių, Vardai po 26.14 milijardus dolerių ir Messaria esant 3.52 milijardo dolerių.
These disparate figures show that even the most reputable research firms fail to have the same data on bitcoin, the top cryptocurrency in terms of market value.
This suggests that opacity is the key word and raises even larger questions about the data regarding trading volumes of less popular and less exposed cryptocurrencies.
And this question in turn raises that of the solvency of certain centralized cryptocurrency exchanges. More than 560 exchanges are operating, according to CoinGecko.