Bitcoin, Crypto currency, Blockchain

Report: Wash Trading in crypto-exchanges to spread

The Non-Profit organization Blockchain Transparency Institute (BTI) has published its second report to the Ranking for crypto-exchanges. Binance remains the largest Exchange in terms of numbers, the trading volume and user. At the same time, BTI calls into question the validity of the data from Coinmarketcap.

Two months after their first Report, the Non-Profit organization Blockchain Transparency Institute (BTI) has taken again the crypto exchanges in the world under the magnifying glass. BTI has the claim to provide more accurate data than the well-known Bitcoin rate page Coinmarketcap (CMC).

BTI vs. Coinmarketcap

At first glance, there seems to be little difference between the stock Rankings of Coinmarketcap and BTI. Both are led by the Bitcoin exchanges Binance, OKEx, and Huobi. Binance is with a daily trading volume of over one billion US dollars table leader. The daily number of visitors to the world’s largest crypto-stock exchange amounts to approximately 312.000. The second – and third-placed Exchanges OKEx and Huobi come here only to around 100,000 daily visitors, with a daily trading volume of around 690 million and 585 million dollars.

On the following places there is a striking difference between the Rankings of CMC and BTI is revealed, however. The least number of Bitcoin exchanges, showing on CMC, the places four to ten, are to be found in the BTI Ranking. The exceptions to this are Bitfinex and Upbit.

This is mainly due to the fact that BTI, refinements to its methodology and purses, where API-Trading accounts for a large part of the trade, in a separate list has been outsourced. The reason: BTI expects that in the case of exchanges with API Trading share of over 80 percent of the suspects that the volume of trade by means of Wash Trading was artificially inflated. The emphasis here is on “suspected,” because:

“This does not necessarily mean that other Transaction-Mining-stock exchanges on this list have their own Bots in order to increase your volumes; only that they compared to their actual volume of Web and mobile users with an excessive number of Bot Trades tighten, using their fee structure exclusively for the removal of local Exchange tokens.”

Already in August-Report BTI rampant Wash Trading defendant among the Top-100 markets. Especially the crypto-exchanges ZB.COM and Lbank should have corrected your trading volume is massively up “”:

“One of the biggest culprits in the [Coinmarketcap-]Top 10 the EG stock market, which seems to increase your volume by Wash Trading in the 390-Fold, and the Lbank, say your trading volume the – and write – 4.400 manipulated Times.”

Small Altcoins for large volume

The analysis of BTI has shown that many cryptographic exchanges, Altcoins with small market capitalization, in order to their trading to inflate volumes:

“We have also found that many of these exchanges rely on Coins with low market capitalization, the struggle for recognition and the volume of a Top-10 or Top – 25-market. In many of the crypto-projects, with whom we have spoken, it is also about to provide the stock exchange with a large amount of tokens, which are then used to set the Volume to increase on CMC solid and potential traders from other exchanges with a much lower, but real volume to attract.“

At the same time suspected would be the case of crypto-exchanges under Wash-Trading-often 80 to 90 percent of the users directly from the page Coinmarketcap.com. The artificially inflated trading volumes take to require the Exchanges to the occasion and, in part, exorbitant Listing fees of 5 to 60 BTC (around 340.000 euros).

Wash Trading as a Symptom of a lack of regulation

The suspicion is that crypto-exchanges, Wash Trading operate, is already longer. At the latest, with the release of “Chasing fake the Volume: a crypto-plague”, a Medium Post by Sylvain Ribes in March 2018, was particularly OKEx in the suspicion to conduct massive Wash Trading.

Ribes has developed a dedicated own analysis technique, in which he collected the order books of all the major crypto-exchanges. Then, the Analyst was looking for would press, how much a sale of a crypto currency in the amount of 50,000 US dollars their price. In his much-acclaimed article Ribes OKEx put in the pillory. The OKEx specified volume of trade in any way with his calculations to be compatible. The question would then only be, whether the volume to 90, 95 or 99 per cent was a fake.

The BTI refers in its August analysis explicitly on Ribes methodology:

“Using Sylvain Ribes carried out Slippage-Search on fake volumes on exchanges […] has created a basic set of exchanges, which perform seemingly an accurate volume representation. This study correlated exactly with the greatest number of Unique Visitors reported by SimilarWeb.“

Nevertheless, OKEx is located both in the case of CMC, as well as in the case of BTI is still at the top of the list – although the suspicion of market manipulation has been confirmed in a further analysis. This fact also reflects the fact that crypto-exchanges move in unregulated waters. Otherwise, you would have at traditional financial markets, prohibited practices such as Wash Trading for the demise of some of the “big” crypto-exchanges.

The still relatively young Non-Profit organization BTI makes an important contribution to the awareness of crypto-investors and Investors for this issue. You may be curious as to what insights the ever-growing Team in its December Report.

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