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Several recent incidents in the cryptocurrency market have increased public doubts and dissatisfaction about digital assets and crypto exchanges, fueled fresh calls for regulatory action, and generally exacerbated the situation.
All of these crypto concerns have harmed the reputations of the sector’s main players and personalities. However, the collapse of two linked cryptocurrencies, TerraUSD and Luna, was the start of everything.
Scandals Would Hurt Cryptocurrency in 2023
According to billionaire Mark Cuban, fraud and scams will increase in 2023. He anticipates the pump-and-dump strategy to succeed. The Dallas Mavericks’ wealthy founder said in an interview with The Street that there were tens of millions of dollars trapped in transactions and tokens without a compelling use case.
#washtrading #pumpanddump Wash trading will cause crypto’s next implosion: Mark Cuban: The majority of centralized exchange volume is fake, according to the billionaire investor and Dallas Mavericks… https://t.co/soiKoeWeik | https://t.co/vqHPEDfX3k | https://t.co/FHLhKD8Jlw pic.twitter.com/6ilDrk1x2I
— CryptoGator.co | Crypto and Forex News Aggregator (@eBargainsToday) January 6, 2023
Additionally, he stated that everyone is prone to cryptocurrency scandals and fraud, meaning famous persons and participants in the sector might potentially become a victim.
According to Mark Cuban, the scandal to watch out for in 2023 is the wash trade. This scam commonly referred to as a “pump-and-dump,” involves creating public interest and investments around a virtual asset before abruptly seizing the money.
Wash trading will cause crypto’s next implosion: Mark Cuban
The majority of centralized exchange volume is fake, according to the billionaire investor and Dallas Mavericks owner. pic.twitter.com/TQ03IZ7DME
— Mr Legend Crypto (@mrlegendcrypto) January 6, 2023
To put it simply, a trader or fraudster buys and sells tokens to exaggerate the trading activity of this coin. The token is then promoted in a positive light on social media, providing the impression to other dealers that it is popular and in great demand. As interest grows, so does the price of it. When an asset is at its peak value, scammers liquidate their holdings.
Wash Trades Can Affect Bitcoin
Wash trades can also be seen in conventional finance. According to the cryptocurrency analytics website CoinGecko, there are over 13,000 listed currencies, which suggests that the industry is noticeably more accepting of the practice. To engage in wash trade, fraudsters must emphasize one or more of their tokens.
The Art of Bitcoin Ponzi: Print fake digital dollars (tether) to pump on social media fake digital gold (bitcoin) and add wash trades to digital infinity. That is bitcoin price. pic.twitter.com/deiSSQLuw3
— 🇪🇺 🇲🇨🇨🇭Dan Popescu 🇫🇷🇮🇹🇷🇴 (@PopescuCo) January 4, 2023
According to a 2022 Forbes analysis of 157 controlled cryptocurrency exchanges, more than half of bitcoin trading volumes were fake. The daily global bitcoin volume for the industry was thus just about $128 billion in June. It is $51 billion less than the $262 billion collected as self-reported volume from various sources.