Direct Evidence of Bitcoin Wash Trading

85 Pages Posted: 3 Jun 2019 Last revised: 27 Dec 2022

See all articles by Arash Aloosh

Arash Aloosh

Neoma Business School

Jiasun Li

George Mason University - Department of Finance

Date Written: December 18, 2022


We use the internal trading records of a major Bitcoin exchange leaked by hackers to detect and characterize wash trading — a type of market manipulation in which a single trader clears her own limit orders to “cook” transaction records. Our finding provides direct evidence for the widely-suspected “fake volume” allegation against cryptocurrency exchanges, which has so far only been backed by indirect estimation. We then use our direct evidence to evaluate various indirect techniques for detecting the presence of wash trades and find measures based on Benford’s law, trade size clustering, lognormal distributions, and structural breaks to be useful, while ones based on power law tail distributions to give opposite conclusions. We also provide suggestions to effectively apply various indirect estimation techniques.

Keywords: bitcoin; cryptocurrency; exchanges; forensics; market manipulation; regulation.

JEL Classification: G12, G18, O31, O35

Suggested Citation

Aloosh, Arash and Li, Jiasun, Direct Evidence of Bitcoin Wash Trading (December 18, 2022). Available at SSRN: or

Arash Aloosh

Neoma Business School ( email )

1 Rue du Maréchal Juin
Mont-Saint-Aignan, 76130

Jiasun Li (Contact Author)

George Mason University - Department of Finance ( email )

Fairfax, VA 22030
United States


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