Solidus Laboratories Research Uncovers $2 Billion in Deceptive Trading Activities on Ethereum-based Decentralized Exchanges
A recent report from Solidus Labs, a platform for monitoring cryptocurrency trades and risks, has revealed that over $2 billion worth of cryptocurrency assets have been involved in wash trading on Ethereum-based decentralized exchanges (DEXs) since 2020.
Pattern Tracking: Laundering Trades and Manipulating Cryptocurrency Pools
Wash trading is a malicious tactic where traders artificially influence the market by placing buy and sell orders with themselves. Solidus Labs studied approximately 30,000 DEX liquidity pools and found that 67% of them have been involved in wash trading. This manipulation accounts for 16% of the total trade amount.
Scammers Exploit Wash Trading to Deceive Investors
The report also highlights how scammers have used wash trading to deceive investors and attract them to fraudulent projects. One notable example involves a meme token called “Shipharm,” which gained significant hype in mid-2021, similar to Shiba Inu (SHIB) and Dogecoin (DOGE). Solidus Laboratories discovered that a network of related wallets artificially inflated the token’s value, attracted unsuspecting investors, and then abruptly halted trading to make a profit of over $2 million.
Implications for the Growing DeFi Market
These findings are particularly concerning as the decentralized finance (DeFi) market continues to gain importance. DeFi operates in less regulated spaces compared to traditional financial markets, making it more vulnerable to manipulation and fraudulent activities.
