What are "wash trades"? And why are they created?

Answer:

A wash trade is something else. A wash trade is an illegal activity wherein someone will use two different brokers to both buy and sell a stock at the same time. Basically just passing shares from one hand to the other, to make it look like there is a sudden increase in activity. Sucking in unsuspecting buyers in the hopes of driving the price of the stock up, so that they can then sell at a premium.

Basically an illegal pump and dump designed to suck in buyers so the perpetrator can sell at a higher price.