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Decentralized Exchanges Witness $2 Billion in Wash Trades

Solidus Labs’ Crypto Market Manipulation Report reveals over $2 billion in cryptocurrency wash trading on Ethereum-based DEXs since 2020.

Key Points

  • Solidus Labs reveals over $2 billion in cryptocurrency wash trading on Ethereum-based DEXs since 2020.
  • Their study found that 67% of 30,000 DEX liquidity pools were affected by wash trading, constituting 16% of manipulated pools’ trading volume.
  • CEO Asaf Meir emphasizes the need to combat market manipulation in the crypto industry for regulatory compliance and institutional adoption.
  • Solidus Labs is developing tools like Token Sniffer and DEX-based A-A Wash Trading Detection, partnering with EDX Markets to enhance transaction monitoring for secure crypto trading.

Solidus Labs, a leading entity in crypto-native trade surveillance and risk monitoring, has recently unveiled that a minimum of $2 billion worth of cryptocurrency has been wash-traded on Ethereum-based decentralized exchanges (DEXs) since 2020.

This revelation is part of Solidus Labs’ latest Crypto Market Manipulation Report.

Crypto Market Manipulation on DEXs

The study conducted by Solidus Labs analyzed around 30,000 DEX liquidity pools and found that 67% of these pools were tainted by wash traders.

Wash traders execute transparent or concealed self-trades with the aim of artificially influencing crypto tokens’ prices or volumes.

The report states that wash trading represented 16% of the total trading volume in the manipulated pools. However, this figure is considered a conservative estimate, given the sample size.

Asaf Meir, Solidus Labs’ Founder and CEO, commented on the findings, highlighting the significant challenge of market manipulation in the crypto industry. He emphasized the need to curb such activities for the crypto and DeFi sectors to thrive in an era of greater regulatory scrutiny and institutional adoption.

Instances of Manipulation Techniques

Solidus Labs’ report provides detailed data and instances of the primary wash trading techniques employed by wrongdoers.

One case highlighted by Solidus involved a coordinated group of wallets manipulating the trading of a meme token called “SHIBAFARM.”

This group attracted speculators, altered the token’s price, and defrauded those speculators, earning over $2 million in the process.

While traditional markets have mechanisms to address wash trading, detecting and preventing it on DEXs remains a regulatory gray area.

Solidus Labs has taken a proactive approach to develop tools that can identify and counteract market manipulation.

Their solutions, including Token Sniffer and DEX-based A-A Wash Trading Detection, are gaining traction among crypto exchanges, regulatory bodies, and investors.

Partnership with EDX Markets

Solidus Labs, known for its monitoring software, has recently partnered with EDX Markets, a prominent crypto exchange supported by major Wall Street firms.

This partnership aims to enhance transaction monitoring and ensure safe crypto trading. Asaf Meir, Solidus Labs’ Founder and Chief Executive, expressed pride in supporting EDX’s vision and emphasized the importance of bridging traditional and digital finance with crypto-native risk mitigation tools.

The collaboration sets higher standards for secure and integrity-driven crypto trading.

Concluding Thoughts

Solidus Labs stands at the forefront of crypto-native market integrity solutions, offering services like trade surveillance, transaction monitoring, and threat intelligence.

With a vision to promote safe crypto trading across all markets, both centralized and DeFi, Solidus is a trusted partner for crypto exchanges, financial institutions, and regulators worldwide.