What if someone sells a monkey jpeg NFT for $1m worth of shitcoins to themselves on a blockchain? The jpeg goes from one eth address to another, and addresses are online identities, which as far as I'm aware, cypherpunks defend the right of the individual to have many of, and the right to reveal them selectively.

It only misrepresents the buy and sell activity if you make assumptions as to what that activity is. But in that case it's you who creates that misrepresentation, and for yourself only.

The idea of a permissionless blockchain (regardless of how permissionless and decentralized the blockchain in question actually is) is that you can do whatever you want on it and none of it is fraud, as long as you don't tie yourself up in [legal] contracts. In that case the smart contracts are the only 'law' and you can interact with them however you wish. You can't breach them by definition (because they're defined by their code), and if they contain a bug that makes them work not the way their author intended, it means the author screwed up rather than that you breached them.

If I guess your Bitcoin private key and move your coins to my wallet it's morally questionable, but it's not theft from the blockchain's POV, because who owns the keys owns the coins. From that POV it's your problem and your fault, because you didn't use enough entropy, or used a technology that wasn't secure enough etc.

Implying that any blockchain activity at all, in the absence of a legal contract, is breach of contract, defeats the point of a permissionless blockchain and opens a statist can of worms.

Binance is a CEX, so it's a different world, legal contracts may be in place and much of the above may not apply, but we're talking about wash trading in the most general sense of the term, without any legal contracts implied.