Bitcoin Halving | Get up to $50 of Bitcoin with a Ledger wallet.

Shop now

Up your Web3 game

Ledger Academy Quests

  • Test your knowledge
  • Earn POK NFTs
Play now See all quests

Wash Trading Meaning

Jul 11, 2023 | Updated Jul 19, 2023
A wash trade is a kind of market manipulation where an individual simultaneously sells and repurchases the same assets, such as NFTs, cryptocurrencies or stocks. This deceptive practice is an attempt to influence the asset’s value or trading volume.

What is a Wash Trading?

Assuming that Gigi has 300 shares of a company’s stock. To make it look like the stock value is appreciating to attract more investors, Gigi creates another account with a different name, say Ogee. She then sells her shares to John and repurchases them immediately at the same price. This creates a false impression of high demand, thereby artificially inflating the stock’s price. This deceptive practice is known as “wash trading”.

A wash trade defines repeated transactions on a particular asset that create the illusion of authentic demand and market activity. It can be carried out by colluding parties executing opposite ends of transactions or a single entity operating more than one address. Wash trades neither change the entity’s market position nor subject them to market risk or price competition.

In the context of crypto, wash trades are prevalent in low-liquidity digital assets like non-fungible tokens (NFTs). To make an NFT appear more in-demand and profitable than it is, an NFT owner subsequently buys and sells the NFT. The wash trader can repeat this process over and again. This means that the individual controls the buy and sell prices to portray inflated volume and interest. As a result, an unsuspecting, genuine investor sees the inflated trading volume and purchases the token at an inflated price. 

NFT wash trading may be characterized by a sudden jump in the token’s price without prior activities. This is especially when the NFT has little to no unique attributes that match the high price. In addition, a wallet address appearing multiple times in the transaction history of an NFT is a potential indication of a wash-traded NFT.

Proof of History (PoH)

Proof of history is an algorithm blockchain networks use to verify the passage of time of each block to ensure historical data accuracy.

Full definition


Minting in the context of blockchain refers to the mechanism through which new coins or tokens are produced and introduced into circulation.

Full definition

Exit Scam

An exit scam is a fraudulent practice of malicious developers or founders disappearing with investors’ funds during or after a project has launched.

Full definition