According to Cointelegraph, market surveillance firm Solidus Labs has reported that over 20,000 crypto tokens have been manipulated through decentralized exchange (DEX) wash trading in the last three years. In the second part of its 2023 Crypto Market Manipulation Report, Solidus revealed that nearly 70% of a sample of 30,000 Ethereum-based DEX liquidity pools were found to have executed wash trades since September 2020, amounting to around $2 billion worth of crypto. Wash trading is a form of market manipulation where an entity buys and sells the same asset, giving the false impression of market activity.

Solidus argued that market manipulators often have easier means to execute wash trades in the crypto space compared to traditional finance. This is due to the fragmentation of liquidity across various centralized and decentralized exchanges, resulting in smaller markets that are easier to manipulate. Additionally, there is an ongoing regulatory question over who is responsible for on-chain wash trading detection and prevention, likely due to the borderless nature of decentralized finance.

Solidus founder and CEO Asaf Meir stated that market manipulation remains a significant challenge within the crypto industry, particularly in an era of greater regulatory scrutiny and institutional adoption. He emphasized that the wash trading activity discovered by Solidus is a clear sign of market manipulation and must be prevented for crypto and DeFi to flourish. The report also noted that wash traders come in various forms, including token deployers seeking an easy rug pull, speculators attempting to game an upcoming token airdrop, and exchange and marketplace operators reporting higher trading volumes to attract investors and users.