Unlawful practices hit top crypto asset exchanges

The most recent market survey report from the Blockchain Transparency Institute has claimed that Binance which is the world’s biggest crypto asset exchange by trading volume, shows signs of wash trading.

The Blockchain Transparency Institute [BTI] is a firm which consists of blockchain data researchers who aim to bring more and more transparency to the crypto asset sector. The Institute has spent the last four months working on a new algorithm which has been built to identify individual accounts on crypto asset exchanges which are involved in wash trading, a process where traders sell and buy securities for the purpose of feeding misleading information to the market.

After few months of research, BTI has discovered that over 10 percent of trading on Binance is wash trading. Most of the wash trading has been observed on 30 trading pairs on the exchange, with some pairs showing signs of up to 75 percent wash trading volume. Binance is no longer considered a “verified exchange” despite being relatively clean when compared to other platforms. According to the Blockchain Transparency Institute, “About 88 to 92 percent of daily trading volume is fabricated depending on the day. Bitcoin’s daily trading volume is about 92 percent fabricated. [Among] the top 40 largest exchanges with actual volume, Bitcoin’s volume is about 65 percent fabricated. Almost all of this fabricated volume comes from Bibox, OKEx, Huobi and HitBTC.”

Different strategies have been used to deceive investors which include buying followers and likes on social media platforms, fake order books, mirror wash trading with other exchanges, and the implementation of bots to prevent the price of those crypto assets from being affected while the process takes place. As a result, fraudulent activities have become an industry with professionals offering services on the black market. In a blog post, Livio Weng, CEO of Huobi Global, said, “The issue of fake trading volumes is a real one in the industry and people have a right to know that the numbers provided by exchanges are legitimate. We think there should be no exceptions and we see something like DATA as a natural next step as our industry grows in both maturity and mainstream acceptance.”

Now the question remains whether these practices will be completely erased from the crypto asset market, which will allow a better implementation of the technology. Until this happens, investors will be exposed to a wide range of risks which include the recent flash crash in Poloniex which caused losses of 1,800 BTC to the users of the exchange.

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