Wash Trading Remains ‘Widespread’ in DeFi, Researcher Kaiko Says
Last week’s roundup of crypto promoters and traders following an elaborate sting operation by federal prosecutors served as a reminder that fake trades used to inflate prices continue to be lingering issue in the digital asset world. The wash trading strategy used to boost the FBI-created token NexFundAI remains a common practice on decentralised-finance exchanges (dexes), and can be encountered on certain centralised exchanges as well, according to researcher Kaiko. “Our data shows that many of the 200k+ assets on Ethereum dexes lack utility and are controlled by single individuals,” Kaiko analysts said in a report Thursday. Some token issuers are setting up short-lived liquidity pools on the exchange Uniswap, and they control the pool liquidity and do wash trading to attract other investors, Kaiko said. Once others have come in, the issuers dump the token, earning yields of up to 22 times their initial Ether investment in around 10 days, Kaiko said. “This analysis reveals widespread fraudulent behavior among token issuers, extending beyond the FBI’s NexFundAI investigation,” the report said. A Uniswap spokesperson didn’t …