The Indicator from Planet Money The crypto market is hot. But is it an illusion?
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Sep 17, 2025 Recent trading in the crypto market has skyrocketed, but is it all just an illusion? Dive into the shadowy world of wash trading, where deceptive practices undermine genuine activity. Discover the significant crackdown by the U.S. Department of Justice known as Operation Token Mirrors. Plus, explore the legal labyrinth surrounding major players like Binance and the implications of incentive programs amid regulatory uncertainty. The crypto world is buzzing, but what’s really behind the noise?
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Wash Trading Dominates Unregulated Platforms
- A 2023 study found about 70% of trading on unregulated crypto platforms is wash trading.
- Wash trades create misleading volume that attracts users and generates fee revenue for exchanges.
IndicatorCoin Example Shows How Wash Trades Work
- Waylon and Adrian use a made-up token, IndicatorCoin, to illustrate wash trading.
- They show how repeated sells between two parties inflate volume and lure investors.
Wash Trading Evolved Into Real-Looking Activity
- Wash trading evolved from fake database entries to real bot-driven trades that mimic activity.
- These real-seeming trades create a Potemkin market that is much harder to detect.