According to billionaire Mark Cuban, owner of the Dallas Mavericks and cryptocurrency investor, The next “implosion” of cryptocurrencies will be caused by the laundering of cryptocurrency tokens in centralized exchanges, or “wash trading”.
In an interview with The Street on January 5, The billionaire investor opined that in 2023 there will be no shortage of crypto scandals after the numerous fiascos that rocked 2022.
Cuban, who has backed several cryptocurrency startups and Web3, said he thinks the next thing The biggest impact to the industry will be “the discovery and removal of laundering operations on centralized exchanges.”
“There are allegedly tens of millions of dollars in trading and liquidity for tokens that have very little utilization,” he said. before adding: “I don’t see how they can be so runny.”
The “wash trading”, illegal under US law, It 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 to get retail traders to buy and push prices up.. In essence, it is a pump and discharge scheme.
Cuban said he was just making a prediction.adding: “I have no specific data to offer to support my conjecture.”
According to a December report from the National Bureau of Economic Research (NBER), up to 70% of the volume of unregulated exchanges corresponds to laundering operations.
The researchers used statistical and behavioral patterns to determine which transactions were legitimate and which were spurious.
Besides, a 2022 Forbes study of 157 centralized exchanges found that more than half of bitcoin trading volumes were fake.
However, wash trading is not limited to centralized exchanges. On January 5, Mati Greenspan, CEO of Quantum Economics and former senior market analyst at eToro, stated that 42% of all NFT volume was from laundering trades.
Yeah. It’s 2023 and we’re still talking about wash trading. https://t.co/y9kiLbu4Eu
— Mati Greenspan (@MatiGreenspan) January 5, 2023
Yes. We are in 2023 and we are still talking about wash trading.
He added that Wash trading is also used to harvest tax losses, making it appear (to the tax authorities) that there has been a greater loss than actually occurred.
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