Uncovering Allegations of Wash Trading on Aevo: Billion-Dollar Volumes and Unexpected Plunge

A recent surge in volume on the decentralized crypto perpetual and options exchange Aevo has sparked suspicion of wash trading, a type of market manipulation in which traders repeatedly act as both buyers and sellers on the same transaction to create a false sense of activity, CoinDesk recently reported.

The accusations, which were raised by several market participants, also point to recent activity in out-of-the-money ether options, or options that have a strike price above the current market price, as evidence of increased market manipulation.

When reached for comment, Aevo CEO Julian Koh explained that the increased volume may be associated with a practice known as “airdrop farming.” This involves users engaging in high trading volumes in order to receive more of a platform’s airdropped tokens.

This increase in activity, which saw daily trading volume jump from around $100 million to over $4.5 billion, follows a boom-bust pattern that has caused a stir in the crypto community.

DeFi Made Here, a pseudonymous analyst, recently took to Twitter to provide insight into the allegations of wash trading and airdrop farming. In an interview with CoinDesk, he explained that there has been a sudden daily volume increase of about $5 billion, primarily coming from the trading of large quantities of the same-day options.

One specific example cited is the trading of 3,025 ETH call options that are due to expire on the same day. DeFiLama, another pseudonymous builder, recently stated that the volume spike on Aevo is due to wash trading, as the platform made a program that rewards volume for airdrop.

Wash trading is a form of market manipulation that is banned in conventional markets like stocks. The recent allegations of market manipulation in crypto by Aevo comes after some regulatory crackdowns in the industry, signaling a potential need for greater regulatory oversight in the space.

Aevo CEO Julian Koh has clarified that the exchanges farming program ended on March 13, when the platform airdropped $95 million worth of AEVO tokens to its users. He also added that the exchange debuted on Binance, the world’s largest cryptocurrency exchange, on the same day, promising greater transparency and accountability in the future.

As the cryptocurrency market continues to gain mainstream attention, it is crucial for market participants to maintain high ethical standards to ensure long-term benefits for all parties involved.