Wash trading.

In plain English

Wash trading is a trade or matched set of trades in which the same beneficial owner sits on both sides, so no real ownership changes hands. The point is to create the appearance of volume and interest where none exists, which can lure other buyers or push a price. It is prohibited under U.S. commodities and securities law, and coordinating with another party to produce the same effect counts as well. Regulators detect it through patterns: repeated offsetting trades between related accounts, and volume that leaves no net position behind. The word wash also appears in tax rules, where a wash sale is a different and entirely legal transaction.

01Why it matters

Volume is one of the first things people check before buying something thinly traded, and wash trading makes that number a lie, which is how thin assets get pumped.

02The math, step by step

Say an account buys 100,000 tokens at 4 dollars from a second account the same person controls, then sells them back an hour later. The tape shows 800,000 dollars of activity across two trades. Nothing was actually bought or sold, and the only real cost was the fees.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

Every figure on this page is sourced to a primary document. Tap to open the original.