Strategic Nature of Cryptocurrency Wash Trading

Determine whether wash traders in cryptocurrency markets engage in strategic wash trading, and assess how establishing the presence or absence of such strategic behavior could enhance methods for identifying wash trades.

Background

The paper situates cryptocurrency wash trading within the broader literature on market manipulation and highlights challenges in identifying wash trades using statistical methods alone. It emphasizes the need to understand whether manipulative participants act strategically, as such behavior would inform detection and enforcement approaches.

Using Mt. Gox transaction logs alongside on-chain and cross-market data, the study aims to characterize conditions under which wash trading occurs. Before presenting empirical results, the authors explicitly note the unresolved status of whether manipulators engage in strategic timing and behavior, framing it as a key question whose resolution could improve identification techniques.