Faking it: Top 25 Crypto Exchange Volumes in Serious Doubt

Faking it: Top 25 Crypto Exchange Volumes in Serious Doubt

A new report from the Blockchain Transparency Institute, an independent research team that deals with exchange volume, found most exchanges in the CoinMarketCap Top 25 are faking trading volumes immensely. Exchange trading volume can make new projects more interesting than they actually are, and, of course, can entice users into trading on the platforms in question. 

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Blockchain Transparency Institute: Fake Volumes Everywhere

The Blockchain Transparency Institute has carried about a new investigation that has resulted in some interesting findings on the real volume of the cryptocurrency markets in some exchanges. It seems that most of the exchanges at the top of CoinMarketCap are into some kind of artificial volume manipulation, according to their latest report, something that reaffirms results of their August research.

They detected 23 of the 25 exchanges have highly faked their volumes to seem more active to the public and possible investors. Exchanges like OKEx fake almost 90% of their volume when referred to their BTC/USDT pairs, according to the study for example, something that is really amazing considering that OKEx is one of the biggest exchanges in the whole world.

Faking it: Top 25 Crypto Exchange Volumes in Serious DoubtOKEx is not the worst offender. Other lesser exchanges fake even more of their volume. CoinsBank, CoinBene y OEx, report 99% fake volumes. Coinbase, being one of the most recognized and important exchanges, is not on the top 25, and Binance and Bitfinex were also found to report just their real numbers.

How and Why

The Blockchain Transparency Institute has also delved into the motivations and the MO of these exchanges when reporting overly exaggerated fake volumes. The report states that these are strategies from exchanges to steal money from aspiring token projects by deceiving them with volumes in order to collect high listing fees.

The report further states how “the average project spent over $50,000 this year in listing fees… and with over 50 exchanges wash trading over 95% of their volumes, this is a $500K a year scheme, with some exchanges making over one million dollars this year just from collecting these fees.”

Faking it: Top 25 Crypto Exchange Volumes in Serious DoubtExactly how volume is faked is a little trickier to explain. It is clear that these exchanges dabble in in wash trading, automatically selling and purchasing cryptocurrencies to inflate market volumes. The report argues ” we have discovered 4 different bot strategies which are used to inflate exchange volume numbers. Some of these bots appear to be set to different trading pairs depending on the time of day. Settings are changed based on current volume trends or hype around a given token for that time period.”

However, they did not release the actual way in which these bots act, and that’s probably in an effort to keep monitoring their behavior and stay ahead of these “bad actors.”

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