What is wash trading? How fake trades inflate volume
By SendPay Business · · 2 min read
Wash trading is when the same person or group buys and sells an asset to themselves. No real change of ownership happens, but the trades make an asset look more popular and more actively traded than it is.
Why people do it
- To make a coin or token look busy so real buyers join in.
- To push an exchange up volume rankings.
- To set a misleading price, for example for an NFT.
- To earn trading rewards that are paid out by volume.
Is it legal?
Wash trading is banned in regulated stock and futures markets in the UK, US and many other countries, because it misleads other investors. In crypto, rules are still catching up in some places, which is one reason it has been more common there.
Warning signs
- Very high volume but few holders or little real interest.
- Trades of the same size repeating at regular intervals.
- Volume that is out of line with other exchanges listing the same asset.
- NFTs passing back and forth between the same wallets at rising prices.
Where SendPay fits
SendPay platforms let customers buy, sell and hold crypto, held with regulated partners, alongside GBP, EUR and USD accounts, powered by licensed partners. SendPay doesn't offer trading tools, DeFi or lending.
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Build my platform →Questions people ask
What is a pump and dump?
A scheme that hypes up an asset's price, then sells out on late buyers.
Pump and dump →What is crypto market cap?
A coin's price multiplied by the number of coins in circulation.
Market cap →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.