Lately, I’ve been hearing more and more about wash trading in the crypto community, so I decided to figure out what it really is.

In simple terms: it’s when someone (or a coordinated group) constantly buys and sells the same token, creating the illusion of huge market activity. No real change of ownership — just fabricated transactions to deceive others. Essentially, it’s an illegal scheme that artificially inflates volumes, distorting the perception of demand.

In crypto, this is especially popular. Why? Because the market is pseudonymous, fragmented, and unregulated exchanges make it easy to do. Automated bots operate 24/7, executing orders in milliseconds — no one will notice.

How does it work in practice? A trader controls several accounts or wallets. Then orchestrates a series of planned transactions for one token. Bots perform quick buy and sell orders between these accounts, simulating high demand without real funds flowing. All of this happens simultaneously on DEX or CEX exchanges.

Next comes concealment — techniques like “layering” (fake orders that are quickly canceled) or intermediaries are used to cover tracks. The ultimate goal is to influence prices, qualify for incentives like airdrops, or simply manipulate exchange rankings.

It’s especially interesting that wash trading is often used by new projects trying to get into the volume top charts. Retail investors see large volumes on the chart and think the asset is popular, so they buy. And then… well, you know.

This is a serious problem in the crypto market, which misleads people. That’s why it’s always worth checking actual activity, looking at on-chain metrics, and not just trusting exchange volumes. Wash trading is something everyone serious about crypto should be aware of.