Research Discovers Discrepancies in Top Exchange Volumes

The Blockchain Transparency Institute (BTI) has released a research report this month, claiming that some of the leading crypto exchanges are participating in wash trades or overstating their trade volumes. The BTI estimates that out of the top 130 cryptocurrency trading platforms researched, more than $6 billion worth of daily crypto asset trade volumes is faked. 

Billions of dollars worth of digital currencies are swapped each day, and there has been approximately $12.9 billion traded during the last 24-hours. Over the past years, many data sites were questioned for exaggerated trade volumes, and various exchanges have been scrutinized for false reporting. For instance, Sylvain Ribes published a study in March revealing some interesting data regarding trade volumes stemming from exchanges such as Huobi and OKex. The research published by the BTI this month explains that 70% of the top 100 exchanges listed on data sites such as CoinMarketCap are declaring fake volumes.

The research’s methodology used the exchange’s unique daily visitor counts and the trading platform’s order book liquidity. The study was conducted using web traffic data websites such as Similarweb and Google Analytics. Sylvain Ribes’ slippage paper was also used to get a more thorough exchange volumes analysis.

“The accurate exchanges outside of the big money exchanges typically have a volume/user to unique visitor ratio of around between 2% and 5% (3.5% average). The suspect exchanges ratio ranged wildly from 10% up to over 655,000%. For example, Lbank and ZB exchanges which both claim to be in the top 10 of all exchanges, are also claiming to have volume/unique visitor numbers over $214,000 and $74,000 per day, respectively. This is outlandish considering known high liquid markets Bitfinex, Binance, and Coinbase fall between $5,000 and $8,500 per visitor per day.”

The BTI also claims that there are discrepancies with trading platform Bibox and exchanges Huobi and OKex. The researchers noted that Binance commands the most significant unique daily visitor counts and Coinbase is the leading trading platform in the USA. In South Korea, the researchers found that Bithumb outpaces Upbit’s volumes, but Upbit contacted the BTI team disputing the statistic. The group said that they would look into the user count of Upbit’s mobile application. They are also willing to collaborate with exchanges who can give verifiable data. The study concluded that around $6 billion stemming from 130 exchanges reporting trade volumes are likely fake.

“Tallying up the volume numbers of the top 130 exchanges, it is estimated that over $6 billion dollars in daily trade volume is being faked with over 67% of daily volume being wash traded,” the BTI detailed.

“Over 70% of the CMC top 100 is likely engaging in wash trading by at least 3x their stated volume.”

False trade volumes are not new to the crypto industry as there have been accusations since the opening of the first exchanges. In 2013 and 2014, there were several editorials and studies concerning exchanges reporting phony figures. In July, Crypto Exchange Ranks released a report accusing CoinMarketCap of incentivizing fake volumes. CoinMarketCap recently made some adjustments to the portal, creating a new display of exchange rankings.