A crypto analysis firm claimed that billions of dollars in market cap are being transferred through decentralized exchanges (DEXs) on Ethereum (ETH). Solidus Labs, in a new report, alleges that crypto token distributors and liquidity providers have engaged in fake trading worth at least $2 billion on Ethereum-based DEXs since 2020.
Analytical Company Reports!
The mentioned activity involves organizations artificially inflating their trading volumes to attract more investment and liquidity by buying and selling assets to themselves at the same price. According to the analytical firm Solidus, approximately 67% of the analyzed liquidity pools of around 30,000 DEXs were manipulated by investors.
At the same time, this manipulated activity accounts for 16% of the total trading volume in manipulated pools, and the firm suggests that this is a conservative estimate considering the size of the analyzed transactions. The analytical company stated:
The fragmentation of liquidity across various DEXs in DeFi creates smaller markets that are more susceptible to price and volume manipulation.
$2 Million Profit!
The report indicates that a connected group of wallets engaged in fake trading on the meme token ShibaFarm to attract speculators. It is also alleged that the activity resulted in profits of over $2 million. Asaf Meir, the founder and CEO of Solidus Labs, stated that addressing fake trading in cryptocurrencies is important in an environment where institutional interest is increasing and regulatory scrutiny is intensifying. An expert on the subject said:
The fake trading activity we have uncovered is a clear sign of market manipulation and needs to be addressed to prevent hindering the development of crypto and DeFi.
In conclusion, Solidus Labs’ report highlights the magnitude and significance of fake trading on Ethereum-based decentralized exchanges (DEXs), emphasizing the need for market manipulation prevention and further regulation.
