Mark Cuban: A New Form of Crypto Crime Will Emerge This Year

Throughout 2022, there were many trends surrounding crypto crime. Many romance scams popped up, clearly proving it was a popular method amongst cyberthieves of getting money that wasn’t theirs. We also saw examples of exchange fraud like with FTX. Now, billionaire investor and crypto bull Mark Cuban says a new crime trend will occur in 2023, though he freely admits he’s suggesting this based purely on his own thoughts, and he has no evidence to suggest it will truly occur.

Mark Cuban: A New Danger Is Coming

In a recent interview, Cuban says that wash trades are likely to become very prominent in the year 2023, though he says this idea stems from instinct, not from fact-based data. He stated that the problem will occur mostly on centralized exchanges, such as what we’ve seen with FTX, and he thinks the problem will expand from there.

Cuban said:

I think the next possible implosion is the discovery and removal of wash trades on central exchanges. There are supposedly tens of millions of dollars in trades and liquidity for tokens that have very little utilization. I don’t see how they can be that liquid… I don’t have any specifics to offer to support my guess.

The U.S. Commodity Futures Trading Commission (CFTC) describes wash trading as follows:

Wash Trading (is) entering into, or purporting to enter into, transactions to give the appearance that purchases and [even] sales have been made, without incurring market risk or changing the trader’s market position.

Basically, a wash trade occurs when artificial interest is stirred in a financial product (i.e., a new crypto token) to make way for what’s called a pump and dump. The hype surrounding the coin is pumped up so much that everyone buys it, thus inflating the price. From there, the executives that created the token make off with the money they’ve made and the asset crashes and burns, leaving all investors in the dust.

As it turns out, bitcoin is not immune to wash trades. A 2022 study conducted by Forbes says that about half the exchange volumes reported by bitcoin and crypto trading platforms are fake. The study read:

More than half of all reported trading volume is likely to be fake or non-economic… The global daily bitcoin volume for the industry was $128 billion on June 14. That is 51 percent less than the $262 billion one would get by taking the sum of self-reported volume from multiple sources.

Using Customers’ Money

If Cuban is correct, this would ultimately take the crypto crime of the last year in an entirely different direction.

Throughout 2022, we saw examples of companies in FTX (and now allegedly the Celsius Network) using customer funds for their own personal gains. With FTX, their money was used to reportedly buy Bahamian real estate.

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