I mean, its win/win for the exchanges though?

Lets say rich person X wants to conduct large-scale wash-trades to artificially increase (or decrease) the price of [insert cryptocoin here].

By conducting it on Exchange-Foobar, Foobar's traffic goes up, while rich person X gets the price change they want. Win-win for both parties.

EDIT: Remember: exchanges win on volume. They want more trades, they don't care if the value goes up or down.

Yes if it's a third party doing it, it's especially a win-win for the exchange as they are getting paid fees on all that transaction volume.

I kind if assumed it was the exchanges themselves faking it. Wash trading without colluding with the exchange is pretty expensive.

All exchanges, even legitimate ones, offer discount packages on anyone who has high volume.

Ex: Interactive Brokers (a legitimate online exchange for stocks) hit it big with its monthly-subscription model: $$subscription / month $20 / for severely discounted trades (fractions of a penny per trade). https://www.interactivebrokers.com/en/index.php?f=1590&p=sto...

Yeah, I get it, but unlike stock transactions crypto exchanges generally take a % of volume traded unlike stock exchanges which take a per-transaction fee instead (I think options might be an exception where there's a per-contract fee..not sure).

If you're about to dump $10,000 to $100,000 worth of fees upon an exchange per month so that you can perform price manipulation (or whatever), you give the exchange a call.

They'll answer. You explain to them that you want to give them $50,000 / month (or something) for 10-million trades/month or whatever.

If they let you, you do it. If they don't, call up another exchange and give them the same offer.

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Its called business. When the $$$ amounts go up beyond a certain amount, you make it worth their while to treat you specially. They want the volume, you want the trades. Old-school business, just talk with them and things happen.