Direct Evidence of Bitcoin Wash Trading

49 Pages Posted: 3 Jun 2019 Last revised: 31 Aug 2020

See all articles by Arash Aloosh

Arash Aloosh

Neoma Business School

Jiasun Li

George Mason University - Department of Finance

Date Written: January 7, 2019


Using data leaked by hackers from a major Bitcoin exchange, we find that more than 2% and up to 33% of all transactions are wash trades, a type of market manipulation in which traders clear their own limit orders to “cook” transaction records. Our finding provides direct evidence for the widely-suspected “fake volume” allegation against cryptocurrency exchanges, which are so far only backed by indirect inferences. While wash trades do not incur a significant positive impact on Bitcoin prices, they do increase transaction fees collected by the exchange. Wash trades also involve exchange insiders previously exposed in other price manipulations. The evidence is consistent with the hypothesis that the exchange commits wash trading itself – not to manipulate price but to inflate apparent trading volume so as to look more attractive to deceived customers and boost commission revenues. We further use our direct evidence to evaluate the indirect inference techniques proposed in the literature.

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 (January 7, 2019). Available at SSRN: or

Arash Aloosh

Neoma Business School ( email )

1 Rue du Maréchal Juin,
Mont Saint Aignan, 76130
+33232824736 (Phone)

Jiasun Li (Contact Author)

George Mason University - Department of Finance ( email )

Fairfax, VA 22030
United States


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