Yeah , I'm curios how he managed to not burst into laughs as he is one of the guys that started the "volume" race .
Indeed.
There may be fake volume in the Chinese exchanges, but I have yet to see little evidence of it. Mr. Lee's tells how they
could do it, but gives no evidence that they do.
I have yet to see evidence of fake volume at Huobi. There is lots of robot (or script-assisted) trade, and their clients apparently trade much more than Westerners, on much narrower margins; but that is expected since there are no trading fees. (If your competitor gets 10x your sales by charging 1/10 of your price, calling his sales volume "fake" is just pathetic.)
There is a suspicious steady background traffic at OKCoin, and (last time I looked) many small trades at random places within the spread (instead of at the ends of the spread, as one would expect for a trade triggered by only one of the parties). That may account for 10-20% of their volume perhaps. Otherwise their trade looks similar to Huobi's.
I have not looked at the other major exchanges in China.
My understanding is that arbitrage trading is usually triggered after any significant change in price at one exchange, such as caused by a sizable trade (and "significant" and "sizable" should be rather small given the no-fee policy). Thus one should expect significant trades to be followed by other significant trades within tens of seconds at most.
Actually the only clearly fake trade I saw in China was a burst of 40,000 BTC robot-traded at BTC-China within a some months ago, which several people noticed and understood to be by runaway trading robot(s). Mr. Lee did not mention that, did he?
On the other hand, there was always suspicion of fake trades in MtGOX. Analysis of the leaked database may perhaps prove or disprove that. Who can tell whether the other Western exchanges are not doing it too?
In fact, I suspect that half or more of the trade at the Western exchanges is merely arbitrage trading from China. If and when China stops trading, we will be able to verify that.
Mr. Lee obviously needs to justify why his exchange should be considered an important player in the Chinese market when their volume is now usually less than 1/20 of Huobi's or OKCoin's. Actually there are other perfectly good explanations for their decline.
Finally, Western bitcoin startups looking for investors and clients obviously do not want to admit that the price of bitcoin was -- and still is -- defined largely by the speculative Chinese market, which is completely unpredictable and closed to them. Of course the thesis of "fake volume" is music to their ears, even if there is no evidence to support it.
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