Editing Wash trading

**Wash trading** is buying and selling the same asset at nearly the same time with no change in who ultimately owns it, producing trading volume that does not reflect real demand.[^1] In memecoin markets it is used to push tokens up volume rankings and through launchpad milestones, and is sold as a service by market makers and volume bots.[^1][^4] US prosecutors have charged it alongside [[Pump and dump|pump-and-dump]] schemes, in which the inflated price is then sold into.[^5]

## How it works
Chainalysis flags two on-chain patterns: an address that buys and sells within 25 blocks for amounts within 1% of each other at least three times, and a controller that funds five or more managed addresses whose buys and sells in a pool nearly cancel out.[^1] It describes Volume.li, a paid bot service selling 24-hour volume packages from $50 to $100,000, which claimed $257.5 million in generated volume.[^1]

## Research
- Solidus Labs reported in September 2023 that token deployers and liquidity providers had wash-traded at least $2 billion on Ethereum-based decentralised exchanges since 2020, in nearly 70% of a sample of 30,000 pools.[^2]
- Chainalysis estimated up to $2.57 billion in suspected wash trading on Ethereum, BNB Smart Chain and [[Base]] in 2024, an upper bound combining $704 million and $1.87 billion from its two heuristics.[^1]
- Mongardini and Mei studied 34,988 meme coins on Ethereum, BNB Smart Chain, [[Solana]] and Base and found that 82.8% of those returning over 100% showed signs of artificial growth such as wash trading.[^3]
- Szwajcok et al., examining 15 million coins launched on [[pump.fun]], put wash trading at no less than 17% of trading transactions but about 1.32% of volume, and found wash-traded coins graduated from the [[Bonding curve]] at 2.0% versus 0.90% for others; the authors note this is a correlation.[^4]

## Regulation
In October 2024 US prosecutors in Massachusetts charged the market makers ZM Quant, CLS Global and MyTrade with wash trading NexFundAI, a token the FBI created for the sting, and charged Gotbit and its leaders over a similar scheme; 18 individuals and entities were charged and more than $25 million in crypto was seized.[^5] CLS traders allegedly traded the FBI's token among bots from 23 August 2024 until its trading was disabled at law enforcement's direction.[^6] The SEC alleged that promoter Vy Pham hired Gotbit for "market-manipulation-as-a-service", including generating artificial trading volume for the Robo Inu token.[^8] Gotbit founder Aleksei Andriunin pleaded guilty and was sentenced to eight months in prison on 13 June 2025; the company received five years' probation.[^7]

## Timeline
- 2023-09-12: Solidus Labs publishes its DEX wash trading report[^2]
- 2024-10-09: Market makers charged in the NexFundAI sting[^5]
- 2025-01-29: Chainalysis publishes its 2024 wash trading estimate[^1]
- 2025-06-13: Gotbit founder sentenced[^7]

## See also
- [[Rug pull]]
- [[Honeypot]]
- [[Mint authority]]
- [[Bundling]]
- [[Sniping]]
- [[Memecoin presale]]
- [[KOL]]

## References
1. [Market Manipulation: Suspected Wash Trading on Select Blockchains May Account for Up To $2.57 Billion in Trading Volume](https://www.chainalysis.com/blog/crypto-market-manipulation-wash-trading-pump-and-dump-2025/), Chainalysis, 2025-01-29
2. [Decentralized exchanges a magnet for crypto wash traders: Solidus Labs](https://cointelegraph.com/news/decentralized-crypto-exchanges-wash-trading-report), Cointelegraph, 2023-09-13
3. [A Midsummer Meme's Dream: Investigating Market Manipulations in the Meme Coin Ecosystem](https://arxiv.org/abs/2507.01963), arXiv (USENIX Security 2026), 2025-04-16
4. [Meme Coin Factories: Uncovering Large-Scale Manipulations on pump.fun](https://arxiv.org/abs/2609.10246), arXiv (CCS '26), 2026-09-09
5. [Eighteen Individuals and Entities Charged in International Operation Targeting Widespread Fraud and Manipulation in the Cryptocurrency Markets](https://www.justice.gov/usao-ma/pr/eighteen-individuals-and-entities-charged-international-operation-targeting-widespread), US Attorney's Office, District of Massachusetts, 2024-10-09
6. [FBI Made a Profit From Ethereum Token Created to Catch Fraudsters](https://decrypt.co/285701/fbi-made-profit-ethereum-token), Decrypt, 2024-10-10
7. [Gotbit founder Aleksei Andriunin sentenced to 8 months following wash trading scheme](https://www.theblock.co/post/358107/gotbit-founder-aleksei-andriunin-sentenced-to-8-months-following-wash-trading-scheme), The Block, 2025-06-13
8. [SEC v. Vy Pham, Litigation Release No. 26153](https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26153), US SEC, 2024-10-15