There have been suspicions for a while that the markets are overinflated. In fact, fears of market manipulation have held up regulatory approval for a number of proposed Bitcoin exchange-traded funds (ETFs), frustrating many enthusiasts who believe that the eventual approval of ETFs will spur broader adoption of the technology by investors.

Now, in a twist, a company hoping to list an ETF has reported to US financial regulators that around 95% of all Bitcoin trading volume has been faked by exchanges.

Bitwise, a crypto-asset management firm, analyzed 81 exchanges, finding that 71 of them exhibited patterns that reflected artificial trading volume. One way to manufacture volume is via a technique called wash trading, in which someone simultaneously buys and sells the same asset. Although the exchanges in the study reported a combined $6 billion in daily volume during four days this month, Bitwise determined that only $273 million of it was real.

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Why would exchanges dishonestly inflate their volumes? One incentive may be to attract ICO (initial coin offering) projects that want to be listed on exchanges that are facilitating lots of trading. To list such projects, some exchanges charge fees that can be as high as a few million dollars.

When Satoshi Nakamoto and the rest of the his merry band of crypto-libertarians conceived of their regulation free paradise, this was inevitable.

The regulatory system they so disdain was developed over nearly 500 years of trial and error dealing with frauds, charlatans, and incompetents, but they think that they can do away with the whole of history, and the very nature of humanity to create a system from a blank slate.