Crypto Manipulation Hinders SEC’s ETF Approval: Report

The ubiquitous crypto market has been witnessing a period of downturn, particularly since the downfall of the once-eminent crypto platform FTX. In a recent YouTube video, the crypto portal Coin Bureau shed light on the two major crises in the crypto industry, namely, insider trading and wash trading, which often lead to market manipulation.

The host provided insights on a recent study that unveiled the critical role of insider trading in crypto manipulation, especially in connection with the unauthorized profits individuals or institutions accumulate through insider trading. As per findings, insider trading has been identified in 14 decentralized exchanges (DEXs) and 22 centralized exchanges (CEXs), with a profit of $300,000. While DEXs engage in insider trading to evade CEXs’ detection systems, it raises concerns about market integrity.

The market is also open to wash trading and fraud trades, however, DEXs tend to be less manipulative in light of their transparent features. Wash trading, according to a definition from Chainsaw, is a “form of market manipulation in which one entity simultaneously buys and sells the same asset, creating a false impression of Market activity despite the trade reflecting no change in beneficial ownership”.

Further, the video illustrated crypto manipulation with the recent research of Solidus Labs that uncovered the $2 Billion worth of wash trades on Ethereum-based decentralized exchanges. Asaf Meir, Solidus Labs’ Founder and Chief Executive, commented,

Market manipulation remains a significant challenge within the crypto industry, especially in an era of greater regulatory scrutiny and institutional adoption. The wash trading activity we have unearthed here is a clear sign of market manipulation, and it must be prevented for crypto and DeFi to flourish.

The video also pointed out that these issues are the key factors that hinder the approval of exchange-traded funds (ETFs). Finally, Coin Bureau reiterated the necessity of establishing the blockchain sector and a wider approach to crypto regulation to tackle crypto manipulation.

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