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Crypto exchanges and Wash Trading: a hot topic!

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The Blockchain Transparency Institute, which has just caused a sensation in the crypto world, is quite transparent. There is no imprint, only “Blockchain Data Researchers”, who want to ensure more transparency and honesty in the crypto scene. But what the hell; Nakamoto Satoshi also sought anonymity for good reason. In any case, the institute has issued its first report, a ranking of cryptographic exchanges according to their actual trading volume and volume per user (August 2018 – Initial Exchange Rankings Report).

Transparency and honesty in the field of the centralized cryptographic exchanges would be a big step in the development of the crypto scene.  How much we need this transparency has already been shown by Sylvain Ribes in a very readable Medium article from March 2018: Chasing fake volume: a crypto-plague. Sylvan Ribes, obviously an experienced crypto trader, was appalled by the extent of wash trading turnover that his analysis (data analysis over 24 hours) of the individual exchanges revealed: according to his analysis, 92.9% of turnover on the Chinese OKex stock exchange is not real, closely followed by Huobi, on which 81.8% fake turnover is obviously represented.  Now, the 1st report of the Blockchain Transparency Institute was issued based on a much simpler analysis  (available order book liquidity and unique visitors per day of the platform according to similar web) with the same result: at least 7 of the top 10 crypto exchanges increase the reported trading volume from 12x to over 100x of their true volume through fake turnover (wash trades).

Report on Wash Trades
Report on Wash Trades


These reports show only an initial analysis of what the level of wash trade turnover on the unregulated crypto exchanges are, and do not cover all other issues such as front-running, insider trading,… which also have to be addressed asap.

The report shows more or less the same results as the report done by´s: Is Making Fake 24/h Trading Volumes The Best Marketing Strategy for Crypto Exchanges?

Why do crypto exchanges increase their sales and what are the consequences?

We can speculate about the reasons. The two biggest “sinners” OKex and Huobi rank themselves among the top exchange markets thanks to their inflated turnover. Because if there’s one thing traders need, it’s liquidity. The more volume traded on an crypto exchange, the easier it is to trade larger positions. The larger the volume, the lower the spread, i.e. the difference between the purchase and sale value. This is especially interesting for short-term traders who enter and exit a position several times a day.

Are there any victims? Sylvain Ribes describes that the heavily discussed Bitcoin Cash and Litecoin are traded to a large extent on OKex and Huobi. This signals a level of interest in these currencies that does not correspond to reality.

Users can only be advised to punish those identified fake crypto exchanges by not using them.

So we understand quite well, why Vitalik Buterin wants the centralized exchanges to go burn in hell as much as possible.


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