Report: Wash Trading & Lack of Transparency is a Pressing Problem for Crypto Exchanges: Bogus Volume is Rampant

The Blockchain Transparency Institute (BTI) has published their second exchange rankings report and according to their numbers – wash trading persists as a profound problem as crypto exchanges seek to boost their perceived relevance in the lucrative sector of crypto.

According to the BTI:

“many of these exchanges are preying on low market cap coins which are desperate for the recognition and volume of a top 10 or 25 exchange. In many of the crypto projects we spoke with, this also involves supplying the exchange with a large amount of tokens which are then used to massively inflate volume numbers on CMC, luring in prospective traders from other exchanges with much lower, but real volume.”

Fake Volume

BTI contrasts itself to CoinMarketCap which has become a touchstone of sorts for cryptocurrency research pertaining to individual coins as well as exchanges. BTI said they found that many exchanges gaining 80% to 90% of their referral web traffic from CoinMarketCap.

BTI also reported that exchanges are charging a listing fee from 5 BTC up to 60 BTC – so at current rates – just under USD $400,000 at the top end.

BTI calls their research “a fascinating picture of the tactics and strategies employed by some of the largest and most powerful crypto exchanges.”

Since their last report, BTI has adjusted their methodology to a degree which has ostensibly improved the veracity of their data.

Some points of interest from BTI:

  • Most exchanges were unwilling to share information. BTI did get about an I8% sample which were open to being transparent about their numbers.
  • A few exchanges replied with numbers far out of the norm from other exchanges in their unique visitor count group and then refused to provide any evidence to back up their claims.
  • Mobile app usage generally ranged from around 50% of web traffic to over 200%.  The Korean based exchanges had the highest amount of mobile users.  Their mobile app usage was up to 3x their web traffic.
  • API trading found the majority of exchanges they surveyed between 20 and 35% (API trading numbers were rounded to the nearest 5%.).
  • Aside from wash trades, they found trading bots would naturally gravitate toward the exchanges with the largest amount of traffic as well as the exchanges with a transaction mining based fee structure.  A transaction mining exchange incentivizes trading by reimbursing traders up to 120% of their fee through the exchanges native token, which essentially pays bots to wash trade.

Beyond the fact that most people engaged in the space accept the reality that manipulation and outright fraud is commonplace, the BTI numbers highlight the pressing need for regulators to step in an apply enterprise level oversight to these digital asset marketplaces. For the industry to survive, and perhaps thrive, regulations must be applied in all jurisdictions. Industry insiders embrace this need as it will flush out the bad actors who clearly need to go.

While there are crypto exchanges that operate legitimately, BTI has created an interesting perspective into the world of crypto.

The BTI Top Ten Crypto Exchanges, as compared to CoinMarketCap are as follows:

Ranking

Exchange

CoinMarketCap Rank

1

Binance

1
2

Okex

2
3

Huobi

3
4

Bitfinex

10
5

Bithumb

4
6

HitBTC

5
7

Upbit

15
8

Kraken

31
9

Coinbase

28
10

Bitstamp

43

The BTI Transparency List is available here and summarized below.

CoinMarketCap RankExchange% API Trading24h vol. claimedEstimated Actual Vol.
2ZB94.99%$435,397,811$65,475,446
5Bibox88.31%$239,514,929$84,017,919
6LBank99.38%$234,422,623$4,386,203
7EXX99.76%$259,088,255$1,867,824
8ZBG99.65%$234,762,894$2,491,776
9Coinbit99.94%$224,842,733$389,760
10Idax97.09%$200,587,882$17,488,414
11Dobi Trade99.89%$231,935,176$743,966
12BCEX99.88%$150,798,828$562,053
13Bitforex97.47%$334,879,176$25,454,286
14Digifinex99.63%$229,686,943$2,557,215
15BitMart94.44%$108,117,717$18,025,847
16Coinsbank99.63%$154,081,523$1,729,494
17Bit-Z97.61%$196,186,473$14,083,260
18OEX99.90%$135,664,661$396,363
19OooBTC99.85%$128,529,193$594,901
20FCoin81.19%$113,878,763$64,263,150
21Cryptonex99.82%$110,645,781$593,712
22Coinsbank99.17%$145,576,014$3,641,380
23Simex99.52%$80,231,609$1,144,321
24Coinbene89.15%$87,700,747$28,535,403
26CoinTiger99.48%$51,160,613$804,552
27Allcoin99.74%$55,015,733$433,327
28Coinzest99.66%$85,427,949$862,861
29RightBTC99.77%$97,437,557$666,865
30IDCM99.19%$99,049,879$2,402,158
31Fatbtc98.58%$31,884,583$1,360,406
32Kryptono98.62%$52,267,575$2,159,639
33CoinEgg98.43%$23,381,831$1,102,565
34Exrates96.35%$36,157,125$3,957,112
35Bitbank91.40%$56,119,170$14,484,793
37B2BX99.54%$31,297,311$431,417
38LAToken97.24%$28,088,496$2,322,368
39UEX98.59%$43,169,896$1,829,344
41Sistemkoin99.35%$34,955,745$686,220
42BTCBox99.22%$31,205,950$732,185
48Livecoin92.26%$17,380,266$4,034,050
51Bitinka97.89%$9,557,756$606,198
54Rfinex98.43%$24,503,332$1,150,576
59Bitlish99.67%$35,498,565$354,255
60Cpdax96.05%$10,574,385$1,253,650
63BTCtrade98.37%$10,246,010$501,711
65BiteBTC91.95%$8,904,691$2,150,904
67C2CX99.73%$12,138,554$98,784
68Mercatox87.02%$7,071,166$2,753,695
69Coinroom98.45%$8,087,635$377,229
70InfinityCoin99.10%$11,905,773$321,348
70Liqui93.77%$7,126,909$1,331,566
76Coinbe96.50%$10,132,036$1,064,146
78ChaoEX98.79%$4,918,211$177,811
79Tidex89.95%$3,505,333$1,057,190
80Korbit92.56%$4,499,891$1,004,472
84GoPax89.13%$2,638,731$860,608
96LakeBTC99.17%$4,101,804$102,617
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