Unit 3 · Level 2 · Copy-danger
Wash trading & painted charts
On a blockchain, nothing stops you from selling a token to yourself: wallet A sells to wallet B, both yours. Do it in a loop and you 'paint' a chart: rising price, busy volume, apparent demand, all manufactured by one person paying only network fees. Studies of NFT markets found a large share of reported volume was exactly this. The chart looks alive; nobody real is home.
Free to play. No ads, no token, no account needed to start.
What you get asked
What is wash trading?
Same owner on both sides of the trade means no real risk transferred, just a fake footprint. (Routing stolen coins is laundering; that's a different crime.)
Why do scammers bother wash trading a worthless token?
Volume is bait. Trending lists, screeners and copy-bots all rank by activity. Fake the activity and real victims arrive on their own.
Put the chart-painting scam in its usual order
Every step is visible on-chain if you look: the same few wallets cycling funds in circles. Copy-bots don't look; that's what the scam counts on.
A red flag for wash trading: huge reported volume but only a handful of ___ wallets actually trading the token.
Real demand is many independent buyers; wash volume is few wallets on a treadmill. Unique-trader counts expose what raw volume hides.
€5M of daily volume on a token, but funds keep looping between the same 6 wallets. Best conclusion?
Circular flow between few wallets is the wash-trading fingerprint. When volume and unique traders tell different stories, believe the traders. 🐜
The rest of this unit
Why blindly following 'smart money' is a trap, and what the signals are really for.