Solidus Labs, a leading entity in crypto-native trade surveillance and risk monitoring, has recently unveiled that a minimum of $2 billion worth of cryptocurrency has been wash-traded on Ethereum-based decentralized exchanges (DEXs) since 2020. This revelation is part of Solidus Labs’ latest Crypto Market Manipulation Report.
The study, which analyzed around 30,000 DEX liquidity pools, found that 67% of these pools were tainted by wash traders. These traders, often executing transparent or concealed self-trades, aim to artificially influence crypto tokens’ prices or volumes. Notably, wash trading represented 16% of the total trading volume in the manipulated pools. Given the sample size, this figure is a conservative estimate of the actual volume of DEX-based wash trading.
Asaf Meir, Solidus Labs’ Founder and CEO, commented on the findings, stating, “Market manipulation remains a significant challenge within the crypto industry, especially in an era of greater regulatory scrutiny and institutional adoption.” He further emphasized the need to curb such activities for the crypto and DeFi sectors to thrive.
The report, being the second in Solidus’ series on Crypto Market Manipulation, offers detailed data and instances of the primary wash trading techniques employed by wrongdoers. One such case highlighted by Solidus involved a coordinated group of wallets that manipulated the trading of a meme token, “SHIBAFARM.” This group attracted speculators, altered its price, and subsequently defrauded those speculators, making over $2 million in the process.
While traditional markets have mechanisms to address wash trading, the responsibility for detecting and preventing it on DEXs remains a regulatory gray area. In response to this challenge, Solidus Labs has been proactive in developing tools to identify and counteract market manipulation. Their solutions, including Token Sniffer and DEX-based A-A Wash Trading Detection, are gaining traction among crypto exchanges, regulatory bodies, and investors.
Solidus Labs is known for its monitoring software, as reported by Blockchain.News, Solidus Labs announced a strategic partnership with EDX Markets on August 10, 2023. EDX Markets, a prominent crypto exchange supported by major Wall Street firms, will integrate Solidus Labs’ HALO platform to enhance its transaction monitoring. This collaboration is in line with Solidus Labs’ mission to ensure safe crypto trading across both centralized and DeFi markets. Asaf Meir, Solidus Labs’ Founder and Chief Executive, expressed pride in supporting EDX’s vision, emphasizing the importance of bridging traditional and digital finance with crypto-native risk mitigation tools. The partnership aims to set higher standards for secure and integrity-driven crypto trading.
About Solidus Labs
Solidus Labs stands at the forefront of crypto-native market integrity solutions, offering services like trade surveillance, transaction monitoring, and threat intelligence. With a vision to promote safe crypto trading across all markets, both centralized and DeFi, Solidus is a trusted partner for crypto exchanges, financial institutions, and regulators worldwide.
Image source: Shutterstock