Are the trading volumes of the world’s leading crypto exchanges fake? New evidence says “yes.”
Hey, Crypto Guys! Quit Lying!
According to a report published by the Blockchain Transparency Institute, approximately 87 percent of the trading volumes of the world’s top 25 crypto exchanges are false. In fact, most exchanges have turned the process into a solid money-making habit.
Embellishing one’s cryptocurrency volume is called “wash trading.” Exchanges exaggerate the popularity or selling power of specific cryptocurrencies, giving them the power to charge coin networks $50,000 or more to list their coins on the exchanges’ respective trading platforms. In addition, exchanges are also able to charge more for initial coin offering (ICO) listings, as exchange-listed ICOs typically attract more investor interest due to their promises of instant liquidity.
You Want to Make Some Money?
The report suggests that of the top 25 exchanges listed on Coinmarketcap.com, only two are not actively engaged in wash trading tactics. The others are likely embellishing their trading volumes by 70 percent or more, with about 12 likely wash trading up to 99 percent of their overall volumes.
Combined, these top exchanges claim that approximately $2.5 billion in trades occur on an average day, though the report suggests that only $324 million is the correct sum. This is about 87 percent less than what the exchanges are stating.
It’s important to note that U.S.-based exchange Coinbase – one of the biggest and most popular exchanges in the world – did not even make the list as those listed were so deeply engaged in wash trading, which Coinbase has refused to partake in. At the time of writing, Coinbase earned the number 33 spot on the list.
So, Who’s Listed?
On Reddit, many users commented on the report’s findings and said that the exchanges making the list were either new or did not boast the power or customer bases to account for such volumes, and thus had to be fabricating the facts.
This has allegedly been a problem throughout 2018, which may have contributed to the crypto winter enthusiasts are now experiencing. However, decentralized exchanges could be the answer traders are looking for.
Decentralization May Be the Key
Unlike centralized exchanges, decentralized ones are more transparent and fairer, thereby eliminating the prospects of wash trading and fake volumes. They offer more security and liquidity, though at press time, they do lack users. Sasha Ivanov – CEO of the blockchain infrastructure development firm Vostok – believes this will change in the coming months.
In a recent interview, he comments:
“Decentralized exchanges are going to become more and more important. It will be much easier to filter out fake volumes in a decentralized setting because basically, everyone can see all the trades, including those that are suspicious… We will see the total victory of decentralized exchanges.”
Do you believe that most exchanges embellish their trading volumes? Post your comments below.
Image courtesy of Shuttershock
