A wash trade is a form of market manipulation in which an investor simultaneously sells and buys the same financial instruments to create deceptive artificial activity in the market. First, an investor will place a sell order, then place a buy order to buy on their own, or vice versa. Several motivations are possible:
Artificially increasing trading volume, making the instrument appear to be in more demand than it actually is.
Generating commissions to brokers to compensate them for something that cannot be openly paid. This was done by some of the participants in the Libor scandal.
Some stock exchanges have implemented preventive procedures against wash trades, sometimes mandatory such as the STPF (Self-Trade Prevention Functionality) on the Intercontinental Exchange (ICE).
Trading Wash has been illegal in the United States since the passage of the Commodity Exchange Act (CEA) of 1936.
In France, the Sanctions Commission of the Autorité des Marchés Financiers sanctions proven wash trade practices, such as in its decision of August 4, 2021 against companies and employees of the Amundi group.
Source: #Wikipedia
Wash trading concerns 1.5% of transactions on #Ethereum. On the NFT side, out of $30 billion in trading volume, wash trading would represent 44.38%.
These fictitious transactions have always represented a significant part of the total volume throughout the year, reaching 80% in January 2022. It should be noted that the volume generated by this practice differs radically from one platform to another.
Picture from #Coinmarketcap #Alexandria
#BNB
