Crypto promoters and traders were reviewed last week after a well-crafted stinging action for federal prosecutors to remind people that fake transactions used to exaggerate prices continue to exist in the digital asset world.
Researcher Kaiko said that the WASH trading strategy used to improve the token created by the FBI, Nexfundai, remains a common practice for decentralized financial exchanges (DEXES) and can also be encountered in some centralized communications.
“Our data suggests that many 200k+ assets on Ethereum Dexes are ineffective and are controlled by a single individual,” Kaiko analysts said in a note on Thursday.
Kaiko said some token issuers are building short-lived liquidity pools on exchange UNISWAP, which controls the liquidity of the pool and does attract other investors. Kaiko said that once others come in, the issuer throws away the tokens, with a yield of 22 times the initial ether investment in about 10 days.
“This analysis reveals widespread fraud by token issuers, beyond the FBI’s Nexfundai investigation,” the report said.
A UNISWAP spokesperson did not return a request for comment.
Some centralized communications, such as HTX and Poloniex, seem to have Wash Trading, Kaiko said. Kaiko said the exchange has the highest number of assets, with a volume-to-liquidity ratio of more than 100 times, which can be an indicator of WASH trading. Justin Sun, who is linked to the two exchanges, was accused by the Securities and Exchange Commission last year of manipulating the secondary market of TRX tokens through WASH trading. The Sun said the case “lacks advantages.”
“At HTX, market integrity is our top priority. We are committed to providing a fair and transparent trading environment for all users,” said a HTX spokesperson. “While we appreciate the research conducted in the industry, we must explicitly deny any allegations of market manipulation.”
For example, when checking the meme doken Pepe, Kaiko found that “the volume trends vary widely between HTX and other platforms in 2024. Pepe volumes on HTX remained high and even rose in July, while they were in most other areas. The exchange has declined.”
“We can also see that tokens such as meme coins, privacy tokens and low-share tits often exhibit unusually high volume to depth ratios,” Kaiko said.
Poloniex did not return a request for comment.
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