Wash Trading Detection Software for Crypto Exchanges

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Wash Trading Detection Software for Crypto Exchanges

Inspired by a conversation on:

The Indicator from Planet Money

The Indicator from Planet Money

The crypto market is hot. But is it an illusion?

Host: Adrian Ma and Waylon Wong

Timestamp: 00:01:00 - 00:02:30

Listen to Episode • View Podcast • All Ideas from The Indicator from Planet Money

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Feather Flow

Direct Quote

"Most crypto trading happens on platforms that are unregulated by government watchdogs. And according to a 2023 study, about 70 percent of trading that happens on these unregulated platforms is actually wash trading."

Market Gap

Crypto exchanges struggle with unregulated wash trading activities.

The prevalence of wash trading in unregulated crypto markets creates significant challenges for exchanges and investors alike. Current estimates suggest that around 70% of trading on these platforms is artificially inflated through wash trading practices. This leads to distorted market perceptions, causing investors to make decisions based on misleading information about asset liquidity and demand. The lack of effective regulatory oversight means that exchanges often lack the tools necessary to identify and prevent these deceptive practices, resulting in a loss of trust and integrity in the crypto marketplace. Without intervention, the ongoing issue of wash trading will continue to undermine the credibility of crypto as a legitimate investment vehicle.

Summary

The proposed business idea is to develop a software tool that detects and reports wash trading activities on cryptocurrency exchanges. This software would utilize advanced algorithms and machine learning models to analyze trading patterns and identify suspicious trading behavior indicative of wash trading. By providing crypto exchanges with the ability to monitor and mitigate these activities, the software can help restore investor confidence and improve market integrity. Target users would include cryptocurrency exchange operators who are looking to enhance their compliance measures and protect their platform's reputation in an increasingly scrutinized market. This solution could also incorporate educational resources about wash trading for exchange staff and users, further promoting transparency in trading activities.

Categorization

Business Model
SaaS
Target Founder
Technical
Difficulty
High
Time to Revenue
6-12 months
Initial Investment
> $10,000

Potential MRR (18-24 months)

Conservative
$5,000 - $10,000 MRR
Moderate (Most Likely)
$15,000 - $30,000 MRR
Optimistic
$40,000 - $80,000 MRR

* Estimates assume solo founder/bootstrap scenario with competent execution

Scores

Clarity
8/10
Novelty
7/10
Feasibility
6/10
Market Potential
8/10
Evidence
7/10
Overall
7/10
Found on September 17, 2025 • Analyzed on September 17, 2025 9:22 AM

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How should I validate this saas idea before building it?

2:34 PM

Great question! For a saas idea like this, I'd recommend starting with these validation steps:

  1. Customer interviews: Talk to Technical to understand their pain points
  2. MVP approach: Build a simple landing page to test demand
  3. Competitor analysis: Research existing solutions and identify gaps

Would you like me to help you create a specific validation plan for your high difficulty idea?

2:35 PM

Yes, and what about the technical implementation? Should I build this myself or hire a team?

2:36 PM

Based on your idea's complexity and 6-12 months, here's my recommendation:

Technical Strategy:

  • Start with no-code tools for rapid prototyping
  • Consider your technical background and available > $10,000
  • Plan for scalability from day one

I can help you create a detailed technical roadmap and resource allocation plan...

2:37 PM

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Similar Ideas

Crypto Trading Volume Analytics Platform

The proposed idea is to create a crypto trading volume analytics platform that offers detailed, transparent insights into trading activities on various cryptocurrency exchanges. The platform would aggregate data from multiple exchanges and employ algorithms to assess trading patterns, highlighting discrepancies that may indicate wash trading or artificial volume inflation. By providing users with accurate information, investors can make more informed decisions based on genuine market activity. The platform could feature a subscription model for users, offering tiered access to data and analytics tools. Potential customers would include individual traders, institutional investors, and financial analysts focused on cryptocurrency markets.