Crypto Wash Trading is the first academic study of wash trading, the illegal act of fabricating trades or acting as a transaction counterparty, on cryptocurrency exchanges. Crypto exchanges are arguably the most profitable players in the cryptocurrency industry, though most remain unregulated. Some exchanges may gain advantages in this unregulated market in ways that are legally or ethically questionable. Previous studies have shown that wash trading distorts price, volume, and volatility, and reduces investors’ confidence and participation in financial markets. The aim of this study is to detect wash trading in cryptocurrency exchanges, estimate the severity of the manipulation, determine which exchanges wash trade and under what market environment, and to discuss the overall impact on the market.

Using the trading history of four prominent cryptocurrencies in 29 exchanges, the authors find that most unregulated crypto exchanges wash trade. Further, 70% of transactions are fake in unregulated exchanges on average. They show that misreporting improves the ranking of exchanges within the industry and relates to short-term price dispersion across exchanges. Also, newly established exchanges with less visitors tend to wash trade more, as they have short-term incentives for wash trading without drawing too much attention.


This is the earliest study to provide suggestive evidence for the efficacy of regulation in the cryptocurrency industry. It poses important implications to investor protection and financial stability. The findings likely have consequences for ongoing lawsuits and empirical research on cryptocurrencies which rely on transaction volumes. These results are highly relevant to sustaining the longevity of the nascent cryptocurrency industry.