New Report Warns 87 Percent of Cryptocurrency Exchange Volume Is Potentially Suspicious



Almost 90 percent of cryptocurrency exchanges’ reported trade volumes may be incorrect, new research from trading analytics platform The Tie warned in a digest released on March 18.

Reporting on figures gathered from 97 exchanges, researchers found that the vast majority of the volume claimed to come from users may not in fact exist.

The revelations came as a result of calculations of lesser-known exchanges versus well-known businesses such as Binance and Kraken.

“In total, we estimated that 87% of exchanges reported trading volume was potentially suspicious and that 75% of exchanges had some form of suspicious activity occurring on them,” The Tie wrote in social media comments on the findings. The organization added:

    “If each exchange averaged the volume per visit of CoinbasePro, Gemini, Poloniex, Binance, and Kraken, we would expect the real trading volume among the largest 100 exchanges to equal $2.1 (billion) per day. Currently, that number is being reported as $15.9 (billion).”

Exchanges have often fielded accusations of volume misreporting: a similar reported issued in March 2018 warned of similar problems with data from exchanges.

Then, as now, Binance CEO Changpeng Zhao (CZ) took industry participants to task, arguing listing resources such as CoinMarketCap added to the confusion.

“Why do exchanges fake volumes?” he queried on Twitter following The Tie’s report. CZ also wrote:

    “(CoinMarketCap) is [the] highest traffic website in our space, and [the] biggest referrer for all exchanges. Ranked high on CMC has benefits for getting new users. BUT at the expense of DESTROYING CREDIBILITY with pro users.”

Zhang repeated similar claims about CoinMarketCap which appeared in December, focusing on the the top 25 Bitcoin (BTC) trading pairs.

Last month, meanwhile, Cointelegraph reported on how overall exchange volumes had dropped to their lowest levels since May 2017.


Reference: https://cointelegraph.com/news/new-report-warns-87-percent-of-cryptocurrency-exchange-volume-is-potentially-suspicious

A great number of persons will not read, or understand, or care about the calculation method.
The fact that somebody made a "report" with this conclusion is enough. Then people will start referring to this news to prove that crypto is scam or whatever suits them best to be proven.
This is the next level of fake news.

I could say the following:

similarweb.com states that Paypal.com had 500 million visits in the last 6 months, which is the same as 2.7 million per day.
Looking at the last 20 payments I've made with Paypal, my average transaction size is ~20 dollars.
Therefore, Paypal has a daily transaction value of (20 * 2.7 million) only $54 million, which is less than 10% of bitcoin's daily transaction value.
Bitcoin is 10 times bigger than Paypal.

What I've said is clearly nonsense, but it also follows the exact same method as in this "article".

I did not do any deep thinking about the article, nor am I a statistician, but none of what you wrote would surprise me.  This is why I don't give any credence to what I read from any news source--and not just the mainstream media.  On a very much related note, the science behind the new Jack the Ripper discovery is apparently so shaky that there's been an outcry amongst forensic scientists and others, and yet the media is hyping the story anyway.

And OP, I know I've suggested this before:  please don't include useless, gigantic pictures in threads you start.  They don't add anything to your posts.  The link to the article is appreciated, at least from my end.  Though this seems to be a bogus conclusion, this is the only website where I get any crypto news, and the discussions about these links are usually pretty good.

lol, CZ is the king of volume manipulation---just look into his history as the architect of okcoin's trading back end. he helped destroy the credibility of the entire market while okcoin/huobi were shitting all over the market with fake volume. and tbh nobody with a brain can fully believe binance's volume numbers given their (lack of) liquidity either.

every exchange in this industry is shady as hell. some more than others, and some are better at hiding it, but that's all. what CZ is saying about CMC is true, but it's just too funny to see him on his high horse about volume manipulation of all issues. that takes some boldness!

I wouldn't be shocked, volume is what attract customers in exchanges. If binance suddenly dropped to one million dollars volume a day, would you continue using it? If they were always like that would you start using them ? I think volume is the most important thing in exchanges to attract customers, the first thing any trader looks at any exchange is the volume.

Also, another topic the volume basically decides on what a company makes on profit, so if a company has like a volume bot that is making their volume look bigger and bigger that means it also looks like they make more and more money, which really helps out in many cases like for example on coinbase for them to get funded by investors and open more places so they could get bigger and eventually don't even need the volume bot one day.

Absolutely volume is important, and without a doubt many exchanges report fake volume to make themselves appear bigger than they are. However, the methodology on this report is utter nonsense, and you would be very naive to be drawing any conclusions from it. Sure, it says a bunch of small exchanges, most of which I've never heard of, are drastically over reporting their volume (which I can believe), but it also says big exchanges like KuCoin, Poloniex, Bittrex, Coinbase and Kraken are all under reporting theirs, some by a factor of 10, which makes no sense whatsoever.

I had assumed most people ignore the 24 hour volumes for both exchanges and coins.

Here we go:

https://www.forbes.com/sites/billybambrough/2019/03/20/researchers-issue-genuine-bitcoin-and-crypto-exchange-warning/#1cf64e3e1833

Just because you disagree with a piece of news doesn't automatically make it FUD. Similarly, suggesting that anyone who shares such news is somehow anti-bitcoin or suppressing a bullrun is both wrong and dangerous. Bitcoin will never become mainstream if we try to shout down and silence every piece of bad news, and if a couple of pieces of bad news is enough to derail bitcoin then it's far weaker than any of us imagined.

This news is nonsense for the reasons I've outlined above, but simply writing it off (or any other story off) as FUD without addressing it first is not conducive to progress.

I don't know if the genuine purpose of reading article was to create some FUDs in the market but  I believe what the article says is truth because it was something that occurred since the year 2016 and coin capital market was also accused of false information that year. However, i dont percentage of exchange with fake volume was actually 87% but I'm 100% sure that some exchange site does the fake volume thing.