Suppose wash trading is indeed occurring, what is the benefit to the perpetrator? Fees are 0.20% for both maker and taker on Kraken. You'd have to pay ~$52,000 to print a $13 million trade.
Let's assume a third-party manipulator (i.e. they can't print new Tether).
To make this economical, they would need an in with at least one exchange. Their trades on this venue (let's call it ShadyBit) would be free, or close to it. This is where the majority of their wash trades happen. If one naïvely averages volume across the market, this will do the trick.
But the jig will fall apart if another exchange starts sharply diverging. So you set up sock puppet accounts there to soak up excess demand. As long as you keep the confidence game balanced, there shouldn't be too many people looking to sell at unusually low prices.
In the meantime, you can continue using your inflated-value tokens as collateral for borrowing or to buy appreciating assets or to sell or whatnot.
If I understand your example correctly, you mean to say that wash trading can be used to inflate prices. This could be true if Tether was simply another no-name altcoin with abnormally large percentage volume on Kraken. However, Tether trades on the magnitude of a few billion USD daily[1]. $13 million is a drop in the bucket. And as the article states, the trade did not impact price.
Not to mention the fact that real traders would stop exchanging their crypto for USDT pretty darn quick if its price fell below £1USD on exchanges trading USD/USDT pairs for a sustained period. A lot of the genuine activity takes place only because people/bots are watching those relatively small volumes of USD/USDT exchanges and seeing a steady stream of USDT orders at $1.
But this isn't happening. Rather than being artificially inflated, the price of Tether stays at $1 (to three significant figures) on all the exchanges.
If the goal of the market manipulator is to artificially inflate the value of Tether to $1 (there are many reasons to believe the true value is less than $1) this would be an indication they are doing an extremely effective job of it.
Let's assume a third-party manipulator (i.e. they can't print new Tether).
To make this economical, they would need an in with at least one exchange. Their trades on this venue (let's call it ShadyBit) would be free, or close to it. This is where the majority of their wash trades happen. If one naïvely averages volume across the market, this will do the trick.
But the jig will fall apart if another exchange starts sharply diverging. So you set up sock puppet accounts there to soak up excess demand. As long as you keep the confidence game balanced, there shouldn't be too many people looking to sell at unusually low prices.
In the meantime, you can continue using your inflated-value tokens as collateral for borrowing or to buy appreciating assets or to sell or whatnot.