Mark Cuban Predicts Next Crypto Scandal, Warns Of Possible Implosion If Exposed: Report

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Billionaire and Shark Tank star Mark Cuban has a prediction on what could be the next thing to rock the crypto industry.

In a new interview with The Street, Cuban says he believes the next “implosion” in crypto markets will stem from the realization that much of the trading volume on centralized digital asset exchanges is actually washing business.

“I think the next possible implosion is the discovery and removal of fictitious trades on central exchanges. There are supposedly tens of millions of dollars in transactions and cash for tokens that have very little use. I don’t see how they can be so liquid.

The washout trade occurs when a single entity makes many different transactions to give the appearance of volume, demand and liquidity for an asset and is often used in “pumping and trading” schemes. dump” on crypto and other markets.

Cuban noted that he had “no specifics” to back up his guess.

Recently, the National Bureau of Economic Research (NBER) released a working paper studying 29 major crypto exchanges. The study determined that, on average, about 70% of the volume on unregulated exchanges is sham trading.

The researchers used Benford’s Law, a statistical benchmark used to detect fraud, to analyze trading data from exchanges. According to the researchers, trading data from most major unregulated crypto exchanges indicates “excessive” washout trading.

“We further provide suggestive evidence that wash trade inflates exchange rankings and cryptocurrency prices, in addition to being significantly predicted by market signals such as past cryptocurrency prices. and volatility and exchange characteristics such as age of exchange and user base.

As the first comprehensive study of the pervasive crypto wash trade, our article not only provides a cautionary tale to regulators around the world, but also reminds readers of the disciplinary or filtering effects of regulation in emerging industries, the importance to use trade-wash-adjusted volume in some empirical studies, and the usefulness of statistical tools and behavioral cues for forensic finance and fraud detection.

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