Wash trading on major blockchain networks like Ethereum, BNB Chain, and Coinbase’s Base has skyrocketed to an estimated $2.57 billion in 2024, according to a new report from blockchain forensics firm Chainalysis.
In addition to the wash trading surge, the analysts also flagged that nearly 5% of all tokens launched this year exhibit traits typical of pump-and-dump schemes. The report, released on January 29, reveals that over 3 million tokens were launched in 2024, with more than 1.3 million of those tokens—approximately 40%—listed on decentralized exchanges.
Despite the high volume of new tokens, only a small fraction have seen active trading. Just 1.7% of tokens launched in 2024 were actively traded in the past 30 days. Chainalysis suggests that the discrepancy may stem from many tokens being abandoned shortly after their creation, possibly due to a lack of interest or because they were part of short-lived schemes like pump-and-dumps or rug pulls.
“Some of these tokens may have been intentionally designed for short-term schemes aimed at exploiting initial hype, such as pump-and-dumps or rug pulls,” Chainalysis noted.
Wash Trading and Pump-and-Dump Patterns
Further digging into decentralized exchange pools, Chainalysis found that nearly 90% of pools suspected of being involved in pump-and-dump schemes were “rugged” by the address that created the pool. In some instances, the same address or a closely linked one funded both the pool and the wallet used to exploit it, indicating a coordinated effort to defraud investors.
The firm also highlighted that wash trading volume on Ethereum, BNB Chain, and Base has reached alarming levels, pegging it at approximately $2.57 billion in 2024. Chainalysis clarified that it uses different methodologies to identify various forms of wash trading, giving a broader picture of the scale of manipulation across these major blockchains.
Growing Concerns for the Crypto Market
The growing prevalence of wash trading and pump-and-dump schemes is drawing concerns about the integrity of the crypto market, especially as new tokens flood decentralized exchanges. This activity undermines investor confidence and may lead to regulatory scrutiny on platforms and projects involved in such practices.
The findings from Chainalysis underscore the need for increased transparency and better mechanisms to protect traders from fraudulent schemes in the rapidly expanding world of digital assets. As more tokens and projects enter the market, both new and seasoned investors will need to remain vigilant against the risks of market manipulation.
Chainalysis’ report serves as a reminder of the ongoing challenges in regulating the decentralized world of cryptocurrencies, where bad actors continue to exploit gaps in oversight for short-term profit.
