Wash Trading

Wash trading is trading with yourself — or with a colluding party — to create the appearance of market activity without any real change in ownership or genuine price discovery. The same actor is on both sides of the trade, so the printed volume is fake.

For example, an exchange or market maker might run bots that buy and sell a token between their own accounts thousands of times a day, inflating reported volume to attract listings, rank higher on data aggregators, or make a token look actively traded. In NFT markets, wash trades between an owner's wallets have been used to fabricate price history and, at times, to farm trading-reward tokens.

Wash trading is illegal in regulated markets and prohibited by reputable crypto venues, but it has been persistently documented across parts of the industry; research has repeatedly found that a substantial share of reported crypto volume on loosely regulated platforms is not genuine. This is why volume figures deserve skepticism, especially for small tokens and smaller exchanges. A common misconception is that high reported volume proves a market is liquid and healthy; wash-traded volume evaporates exactly when you try to trade against it, so order-book depth and slippage are better liquidity signals than headline volume.