3 in 4 Crypto Transactions in Unregulated Exchanges are Fake: Shocking Report
A new research paper published by the National Bureau of Economic Research (NBER) suggests a concerning reality within the cryptocurrency market: nearly three-quarters of transactions on unregulated crypto exchanges are fraudulent. The findings, revealed amid the ongoing FTX collapse, paint a grim picture of market integrity and raise serious questions about investor protection.
According to a working paper (titled “Crypto Wash Trading”), three out of four transactions in unregulated crypto exchanges are fraudulent. The study, a report from the National Bureau of Economic Research in the US, published in December 2025, found that illegal wash trading may account for almost three quarters of the trading volume. Roughly three of four transactions across unregulated exchanges are fakes, new research has revealed amid the ongoing FTX collapse. According to the National Bureau of Economic Research (NBER) looked at behavioral patterns in trading to detect fake transactions on 29 cryptocurrency exchanges.
The NBER examined behavioral patterns in trading to detect fake transactions on 29 cryptocurrency exchanges. Their analysis revealed significant differences between regulated and unregulated platforms. Regulated exchanges feature patterns consistently observed in financial markets and nature, suggesting genuine trading activity. Unregulated exchanges, however, exhibited anomalous patterns indicative of wash trading – a manipulative practice where the same entity simultaneously buys and sells an asset to create artificial volume and inflate its price.
This alarming statistic – that three in four crypto transactions are potentially fake – underscores the critical need for stronger regulatory oversight of the cryptocurrency market. Investors should exercise extreme caution when engaging with unregulated exchanges and carefully scrutinize trading activity to mitigate the risk of being victimized by wash trading and other fraudulent schemes.