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You do NOT need to change the prices for it to be a wash trade. What you gave me a profitable and likely illegal example of a wash trade, but not a definition

You do NOT need to change the prices for it to be a wash trade. What you gave me a profitable and likely illegal example of a wash trade, but not a definition of wash trade. A wash trade could be selling thing X for $100 and buying thing Y for $100 where X and Y are the same exact underlying thing. Just moving pointless trades back and forth inflates volumes, which makes people thing the market is moving. See https://www.investopedia.com/terms/w/washtrading.asp https://www.investopedia.com/terms/w/washtrading.asp for more

dragontamer 5y ago
> You do NOT need to change the prices for it to be a wash trade. No you don't. But you do need to be buying and selling the underlying repeatedly for "some reason". That "some reason" could be fraud, or it could just be tax-optimization. The important thing is, "wash trading" is the technique of buying-and-selling the same thing at nearly the same time... which has many many applications. Many of those applications are illegal and fraudulent in a traditional market. So seeing something like 70% of the volume of the real world cryptomarket being wash trading suggests that there's more fraud in the cryptomarket than people generally realize.
- thebean11 5y ago
  My guess is honestly just exchanges trying to get closer to the top of sites like coinmarketcap..
  - dragontamer 5y ago
    I mean, its win/win for the exchanges though? Lets say rich person X wants to conduct large-scale wash-trades to artificially increase (or decrease) the price of [insert cryptocoin here]. By conducting it on Exchange-Foobar, Foobar's traffic goes up, while rich person X gets the price change they want. Win-win for both parties. EDIT: Remember: exchanges win on volume. They want more trades, they don't care if the value goes up or down.
    - thebean11 5y ago
      Yes if it's a third party doing it, it's especially a win-win for the exchange as they are getting paid fees on all that transaction volume. I kind if assumed it was the exchanges themselves faking it. Wash trading without colluding with the exchange is pretty expensive.
      - dragontamer 5y ago
        All exchanges, even legitimate ones, offer discount packages on anyone who has high volume. Ex: Interactive Brokers (a legitimate online exchange for stocks) hit it big with its monthly-subscription model: $$subscription / month $20 / for severely discounted trades (fractions of a penny per trade). https://www.interactivebrokers.com/en/index.php?f=1590&p=stocks2 https://www.interactivebrokers.com/en/index.php?f=1590&p=sto...
        thebean11 5y ago
        Yeah, I get it, but unlike stock transactions crypto exchanges generally take a % of volume traded unlike stock exchanges which take a per-transaction fee instead (I think options might be an exception where there's a per-contract fee..not sure).
        dragontamer 5y ago
        If you're about to dump $10,000 to $100,000 worth of fees upon an exchange per month so that you can perform price manipulation (or whatever), you give the exchange a call. They'll answer. You explain to them that you want to give them $50,000 / month (or something) for 10-million trades/month or whatever. If they let you, you do it. If they don't, call up another exchange and give them the same offer. ------- Its called business. When the $$$ amounts go up beyond a certain amount, you make it worth their while to treat you specially. They want the volume, you want the trades. Old-school business, just talk with them and things happen.
- chollida1 5y ago
  Wash trading doesn't change the price, it just increase volume, hence the term wash, there is no price change to the owner. Selling your own NFT to your self for a profit, that's something else, but its not a wash trade as in that case there is a price change.
ishjoh 5y ago
This is exactly right, in fact if you think about tax breaks on losses it can actually make a lot of sense to sell yourself the same asset at a loss. In the case of crypto you probably wouldn't sell an NFT at a loss, but a coin would definitely make sense to sell to yourself at a loss.
- vineyardmike 5y ago
  IANAL I don’t think thing that’s how taxes works. If you sell yourself the security, it never left your hand so you didn’t realize a loss.
  - brianwawok 5y ago
    I think he is trying to describe tax loss harvesting https://www.investopedia.com/terms/t/taxgainlossharvesting.asp https://www.investopedia.com/terms/t/taxgainlossharvesting.a... What robo advisors can do.. is sell say.. asset A that perfectly tracks an asset (say S&P 500)... and then buy asset B that perfectly tracks an asset (say S&P 500). So you end up with the "same thing" at the end of the day, but got to harvest some losses. That said, I think there are some iffy legal situations here, and you run the risk of breaking the law here. https://www.investopedia.com/terms/r/robo-tax-loss-harvesting.asp https://www.investopedia.com/terms/r/robo-tax-loss-harvestin... https://www.sofi.com/learn/content/automated-tax-loss-harvesting/ https://www.sofi.com/learn/content/automated-tax-loss-harves...
    - vineyardmike 5y ago
      TLH is real, but "sell yourself the same asset at a loss" sounds fishy to me. Because with TLH its not "the same asset" in that its not (a) the literal same item moved from one hand to the other. (b) its not the same item ticker (basically a day trade across accounts) (c) Its not buying/selling with yourself
dqpb 5y ago
Transferring money/assets between your accounts is a pretty normal thing to do…

dragontamer 5y ago

> You do NOT need to change the prices for it to be a wash trade. No you don't. But you do need to be buying and selling the underlying repeatedly for "some reason". That "some reason" could be fraud, or it could just be tax-optimization. The important thing is, "wash trading" is the technique of buying-and-selling the same thing at nearly the same time... which has many many applications. Many of those applications are illegal and fraudulent in a traditional market. So seeing something like 70% of the volume of the real world cryptomarket being wash trading suggests that there's more fraud in the cryptomarket than people generally realize.

thebean11 5y ago
My guess is honestly just exchanges trying to get closer to the top of sites like coinmarketcap..
- dragontamer 5y ago
  I mean, its win/win for the exchanges though? Lets say rich person X wants to conduct large-scale wash-trades to artificially increase (or decrease) the price of [insert cryptocoin here]. By conducting it on Exchange-Foobar, Foobar's traffic goes up, while rich person X gets the price change they want. Win-win for both parties. EDIT: Remember: exchanges win on volume. They want more trades, they don't care if the value goes up or down.
  - thebean11 5y ago
    Yes if it's a third party doing it, it's especially a win-win for the exchange as they are getting paid fees on all that transaction volume. I kind if assumed it was the exchanges themselves faking it. Wash trading without colluding with the exchange is pretty expensive.
    - dragontamer 5y ago
      All exchanges, even legitimate ones, offer discount packages on anyone who has high volume. Ex: Interactive Brokers (a legitimate online exchange for stocks) hit it big with its monthly-subscription model: $$subscription / month $20 / for severely discounted trades (fractions of a penny per trade). https://www.interactivebrokers.com/en/index.php?f=1590&p=stocks2 https://www.interactivebrokers.com/en/index.php?f=1590&p=sto...
      - thebean11 5y ago
        Yeah, I get it, but unlike stock transactions crypto exchanges generally take a % of volume traded unlike stock exchanges which take a per-transaction fee instead (I think options might be an exception where there's a per-contract fee..not sure).
        dragontamer 5y ago
        If you're about to dump $10,000 to $100,000 worth of fees upon an exchange per month so that you can perform price manipulation (or whatever), you give the exchange a call. They'll answer. You explain to them that you want to give them $50,000 / month (or something) for 10-million trades/month or whatever. If they let you, you do it. If they don't, call up another exchange and give them the same offer. ------- Its called business. When the $$$ amounts go up beyond a certain amount, you make it worth their while to treat you specially. They want the volume, you want the trades. Old-school business, just talk with them and things happen.
chollida1 5y ago
Wash trading doesn't change the price, it just increase volume, hence the term wash, there is no price change to the owner. Selling your own NFT to your self for a profit, that's something else, but its not a wash trade as in that case there is a price change.

ishjoh 5y ago

This is exactly right, in fact if you think about tax breaks on losses it can actually make a lot of sense to sell yourself the same asset at a loss. In the case of crypto you probably wouldn't sell an NFT at a loss, but a coin would definitely make sense to sell to yourself at a loss.

vineyardmike 5y ago
IANAL I don’t think thing that’s how taxes works. If you sell yourself the security, it never left your hand so you didn’t realize a loss.
- brianwawok 5y ago
  I think he is trying to describe tax loss harvesting https://www.investopedia.com/terms/t/taxgainlossharvesting.asp https://www.investopedia.com/terms/t/taxgainlossharvesting.a... What robo advisors can do.. is sell say.. asset A that perfectly tracks an asset (say S&P 500)... and then buy asset B that perfectly tracks an asset (say S&P 500). So you end up with the "same thing" at the end of the day, but got to harvest some losses. That said, I think there are some iffy legal situations here, and you run the risk of breaking the law here. https://www.investopedia.com/terms/r/robo-tax-loss-harvesting.asp https://www.investopedia.com/terms/r/robo-tax-loss-harvestin... https://www.sofi.com/learn/content/automated-tax-loss-harvesting/ https://www.sofi.com/learn/content/automated-tax-loss-harves...
  - vineyardmike 5y ago
    TLH is real, but "sell yourself the same asset at a loss" sounds fishy to me. Because with TLH its not "the same asset" in that its not (a) the literal same item moved from one hand to the other. (b) its not the same item ticker (basically a day trade across accounts) (c) Its not buying/selling with yourself

dqpb 5y ago

Transferring money/assets between your accounts is a pretty normal thing to do…