Wash Trading
Artificially inflating an asset's trading volume by repeatedly buying and selling it between controlled accounts to create a false impression of market activity.
Also known as: fictitious trading, self-dealing trades, volume manipulation
Last reviewed: 1 June 2026
Wash trading involves a party — or coordinated group — simultaneously buying and selling the same asset to generate volume without any genuine change of ownership or economic risk. The result is a misleading appearance of liquidity and demand that can attract real outside investors who believe the asset is more popular or valuable than it actually is.
In traditional financial markets, wash trading is illegal under most securities regulations. In cryptocurrency and NFT markets, it became rampant due to weaker oversight, automated trading bots, and fee incentives on some exchanges that reward high trading volume. NFT projects in particular attracted criticism for wash-trading volumes that inflated perceived prices ahead of public sales.
Wash trading harms genuine investors by providing false price signals, manipulating order books, and facilitating exit scams where insiders sell real holdings into artificially inflated demand. It is closely related to pump-and-dump schemes, market manipulation, and the broader concept of spoofing order books.
Examples
- A team launches an NFT collection and uses automated wallets to buy and sell items between themselves, generating a reported volume that attracts genuine buyers before the team withdraws proceeds.