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

January 6, 2023No Comments

Laundering trading of crypto tokens on centralized exchanges will be the cause of the next crypto “implosion,” according to billionaire Dallas Mavericks owner and crypto investor. cuban mark.

In an interview with The Street on Jan. 5, the billionaire investor opined that 2023 will not be without its crypto scandals following the numerous fiascos that rocked 2022.

Cuban, which has backed several cryptocurrencies and Web3 startups, said he believes the next big impact on the industry will be "the discovery and removal of laundering exchanges on core exchanges."

“There are allegedly tens of millions of dollars in transactions and liquidity for tokens that have very little utilization,” he said. said before adding: "I don't see how they can be so runny."

Cuban Marcos. Source: American Broadcasting Company website

Wash trading, which is illegal under US law, is a process by which a trader or bot buys and sells the same crypto asset to provide misleading information to the market.

The goal is to artificially inflate volumes so that retailers jump on the bandwagon and push prices up. In essence, it is a pump and discharge scheme.

Cuban said it was just a prediction, adding: "I don't have any details to offer to support my assumption."

As much as 70% of the volume on unregulated exchanges it is wash trading according to a December report from the National Bureau of Economic Research (NBER).

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

Also, a 2022 to study by Forbes in 157 centralized exchanges found that more than half of Bitcoin trading volumes were fake.

Related: Mark Cuban to Bill Maher: 'If you have gold, you're a fucking fool... Just get Bitcoin.'

However, wash trading is not just limited to centralized exchanges. On Jan. 5, Quantum Economics CEO and former eToro senior market analyst Mati Greenspan said that 42% of all NFT volume is traded with washing.

He added that the wash trade is also used to crop tax lossesmaking it appear (to the tax collector) that there has been a greater loss than in reality.