Fraudulent Trading Activity on Ethereum-based DEXs
Solidus Labs research found $2 billion in fraudulent trading activity across Ethereum-based decentralized exchanges.
Newly released data from Solidus Labs, a cryptocurrency trade monitoring and risk monitoring platform, indicates that $2 billion worth of crypto assets have been traded on Ethereum-based decentralized exchanges (DEXs) since 2020.
The report highlights the widespread but preventable issue of market manipulation in the world of decentralized finance (defi).
Pattern Tracking: Laundering trades and manipulated crypto pools
Wash trading is a malicious tactic where traders place buy and sell orders for themselves to artificially influence the market. Of the nearly 30,000 DEX liquidity pools studied, Solidus Labs identified a staggering 67% where wash trading took place. In these manipulated pools, wash trading accounted for 16% of the total trade volume.
The report also shows how fraudsters used laundering trade to lure investors into rug-pulling projects.
One particularly glaring example concerns a meme called “SHIBAFARM.” The token was launched in mid-2021 when the hype around the meme coin was off the charts. Since the prices of Shiba Inu (SHIB) and Dogecoin (DOGE) were also rising at the time, the project used FOMO to attract investors.
Solidus Labs found that a network of related wallets artificially inflated the value of the token, luring unsuspecting investors before suddenly halting delivery, generating a profit of more than $2 million.
The report’s findings are particularly concerning given the growing importance of DVI, which often operate in less regulated spaces than traditional financial markets.
