I have two friends who work at two brokerages. Both are in the top 3. They reported to me about this unethical and immoral practice.
Both advised that each user should perform self-custody, which would make this dirty practice less harmful to users.
- Wash Trading: When the brokerage or large players engage in artificial buying and selling of an asset to manipulate its price and volume, creating the illusion of high liquidity or demand.
- Self-Dealing: When the brokerage trades against its own clients, using the assets stored on the platform to influence market prices.
Furthermore, the lack of asset segregation (not keeping clients' funds separate from those of the brokerage) can lead to additional risks such as fraud and insolvency. This type of practice raises concerns about conflicts of interest and transparency in the cryptocurrency market.
In my opinion, this is a crime and those who practice it should be severely punished. Until retail strength arrives and BTC dominance falls, everyone will be at the mercy of this mafia.
