Wash trading ... creates an illusion of false value velocity.
FTFY.
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If funds will be directed to somewhere that doesn't have actual value to the economy,
Except funds aren't going anywhere. From right pocket to left pocket of the same entity is not a direction of funds.
I have seen United Bitcoin being wash traded on Quoine with a daily volume of $450k. When you look at the books, the total value of buy orders until the price went to zero was $1,400.