Famous Billionaire Mark Cuban Says Wash Trading Can Cause the Next Cryptocurrency Crisis
Mark Cuban, a prominent billionaire, has recently expressed that the likely reason for the impending crypto downfall is to be the wash trading. While appearing in a recent interview that was conducted by TheStreet, Cuban (a prominent crypto investor) voiced concerns over crypto’s journey into 2023. As per him, the current year will additionally be marked by the frauds and scandals that will exploit the industry of digital currency.
Mark Cuban Says Wash Trading Might Ignite the Next Crypto Slump
The business giant mentioned that it has no longer remained a question of if this will take place or not. Rather, he added, the question is related to the time of the next market-crippling incident. In the words of Cuban, from now onward, a lot of attention would be grasped by the centralized exchanges in the case of wash trading.
The owner of the NBA team named “Dallas Mavericks” asserted that the coming potential implosion will deal with wash trading. Cuban is of the view that this will take into account the detection as well as the elimination of wash traders related to the centralized exchange firms. He specified that several millions of dollars are allegedly existing in liquidity and trades for tokens with very less use cases.
Categorized as a form of pump-and-dump project, wash trading takes into account the development of fake interest for crypto assets and other financial assets. In the procedure, a trading party will drive the common masses to trust that a particular digital token has a considerable demand. Along with this, the traders convince the investors that the respective token has a lot of use cases as well as social media hype.
With these claims, the traders persuade the investors to purchase a great amount of that crypto token to get numerous benefits although the reality is the opposite. As per the Commodity Futures Trading Commission, this form of illegitimate activity permits the organizers to accomplish transfers with slight or no risk. According to the billionaire, they do not even require altering their position in the market.
Cuban thinks that such a scheme will become the reason for another slump in the crypto industry. Nevertheless, he acknowledged that there is no concrete evidence currently to back this theory. Back in 2022’s May, the crypto industry was gradually recovering from the winter that haunted the majority of the crypto assets. As a result, the top crypto tokens like Bitcoin witnessed losses of billions in worth following UST (TerraUSD) and LUNA crash.
This incident initiated a chain reaction in which other big names like Three Arrows Capital (3AC) were compelled to file bankruptcy applications. Following that, the epic collapse of the FTX crypto exchange occurred in November 2022. These chilling developments crippled the wider crypto industry and several digital assets saw price drops.
Regulatory Bodies Keenly Oversee Wash Trading Dealing with Crypto Assets
Several among them have not yet completely witnessed a complete recovery from the damages caused after such incidents took place. In the meantime, many Bitcoin exchanges have been involved in increasing the trading volume via wash trading.
This has turned out to be a significant concern for a considerable period. The US Securities and Exchange Commission bans wash trading transfers in the form of a manipulative method. Regulatory entities across the globe are keeping a close eye on the wash trading with the use of crypto assets.
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