Wash Trading

Definition ∞ Wash trading is a deceptive practice where an individual or entity simultaneously buys and sells the same financial instrument to create misleading activity. This artificial trading volume aims to manipulate market perception, suggesting higher demand or liquidity than genuinely exists. In cryptocurrency markets, wash trading can inflate trading volumes on exchanges. It can also create false price signals, deceiving other market participants. This activity distorts market data.
Context ∞ Wash trading is a persistent issue in the less regulated segments of the cryptocurrency market, often highlighted in news concerning market manipulation and data accuracy. Regulators globally are increasingly scrutinizing exchanges for evidence of such practices. The development of more sophisticated market surveillance tools and clearer regulatory guidelines aims to combat wash trading and promote fairer market conditions.