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Blockchain Transparency Institute Blasts Top Exchanges For Wash Trading

The Blockchain Transparency Institute (BTI) has released a report claiming that over 80 percent of trading volume in the top 25 bitcoin trading pairs is faked by wash trading. The findings suggest trading volume is exaggerated by traders (and possibly exchanges) deliberately boosting volume by buying and selling crypto assets.

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Three-Month Surveillance Effort Reveals Fraud Through Wash Trading

The December 2018 findings were released after a three-month surveillance period in which the group monitored trading on the top crypto exchanges. The BTI kept a close eye on trading patterns to determine the extent of wash trading or other forms of market manipulation.

Within the top 25 trading pairs, only Bitfinex and Binance trading volumes reflected true trading volume. The findings appear to indict significant exchanges like OKEx, Huobi, and HitBTC.

Wash Trading

OKEx Singled Out

OKEx in particular was singled out for wash trading manipulation and placed on the BTI’s Exchange Advisory List, which lists exchanges the BTI considers to be engaging in fraudulent activity. As the group says about the exchanges in the list:

“We strongly advise you contact us before paying listing fees to any of these exchanges.”

On OKEx, the BTI explained:

“OKEx has been moved to our Exchange Advisory List as we found just about all of their top 30 traded tokens to be engaging in wash trading when processed through our algorithms. It appears they have benefited the most from the CMC referral traffic, as our estimated adjusted volume for them would still keep them in the top 10.”

OKEx has been at the center of a number of controversies recently. Founder Star Xu was recently questioned by police in Shanghai allegedly in relation to fraud accusations made by local investors.

The exchange also relieved traders of 18 percent of their unrealized gains in August to cover the shortfall in a liquidated $416 million USD long bitcoin futures position taken by an OKEx whale.

The mechanism of socialization of losses is a mechanism the exchange refers to as its “societal risk management mechanism”. More colloquially, it is referred to as the “Too-Big-To-Fail-Whale” trigger.

Regulators Like Not What They See

Both the Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice (DOJ) have opened investigations into exchanges they suspect of engaging in market manipulation.

Have your say. Do you believe wash trading is a big problem among crypto exchanges?


Images via Pixabay

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