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

[cybersofts]

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

[o_e_l_e_o]

What a completely nonsense report. If you follow the links through to the data they used here (https://docs.google.com/spreadsheets/d/13_L5V9elxQ3xps62BeYVyr_Wu-9vfyAyN5tGqLNoV9Y/edit#gid=1415549973), it is all over the place.

They calculated the average trading volume to be $591, but they don't say how the arrived at that number. Then then multiplied that number by the number of website visits for each exchange for per month, to arrive at an "expected volume" number. That has to be one of these least scientific methods I could possible imagine, and it shows in how wildly inaccurate some of their numbers are. They are suggesting, for example, that KuCoin's real trading volume is actually 1300% higher than what KuCoin are reporting. I can understand smaller exchanges falsely reporting higher volumes in an attempt to seem bigger, but what possible reason would KuCoin have to make themselves seem smaller and less significant than they are? Similar, they suggest that Poloniex is actually 930% higher and Bittrex are 430% than they are reporting.

They used a stupid method, and therefore got stupid results. No conclusions can be drawn from this report.

[NeuroticFish]

They used a stupid method, and therefore got stupid results. No conclusions can be drawn from this report.

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.

[Theb]

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).

This is by far the dumbest equation I have seen created in order to have some headline on their website. How can someone translate a website visit into becoming a official traded volume of an exchange without even factual evidence that the viewer have actually traded or even has an account to trade in? Are they actually confident or at least aware that their readers only read through the headlines and not the whole article that they made some shitty content based on a big assumption?

[o_e_l_e_o]

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".

[exstasie]

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.

Tell us something we don't know.

It used to be even worse. 3-4 years ago, the Chinese exchanges like Huobi were supposedly doing millions of BTC in daily volume. It was laughable. Traders thought it was hilarious because it was so unbelievable.

Lots of exchanges are still doing this today, just a bit more subtly.

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

I'm not so confident the "well-known businesses" are being honest either.

[The Sceptical Chymist]

They used a stupid method, and therefore got stupid results. No conclusions can be drawn from this report.

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.

[gentlemand]

I thought everyone knew this.

Most of the exchanges up top on Coinmarketcap are blatantly faking pretty much all of their volume. They come out of nowhere and suddenly massively outgun exchanges that have been around for years that real traders trust in a matter of weeks.

I expect volume that isn't fiction is 20% or much, much less of that reported on CMC.

[figmentofmyass]

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.”

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!

[Tytanowy Janusz]

As @o_e_l_e_o mentioned the way they counted that is hilarious but fake volume and fake traffic are visible with naked eye and harms whole market.

That's the video I've made on UEX exchange. Same thing I've seen on many others. Order is being fulfilled instantly as long as it's not mine order.

https://vimeo.com/325609464

[Kevin77]

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.

[Pursuer]

there is no way you could ever measure the real volume on exchanges specially with such accuracy so that you come up with a number such as "87" and not 90, 80 or a round thing like that!!! 87% is another reason why this is pure bullshit by someone who was bored with the market and wanted to start something up again.

the fact is that we all know exchanges fake their volume most of them for competition, some others for manipulation reason.... but in most cases (specially the big ones) the fake volume is far less than what this newbie author thinks. it probably is not even bigger than 10% in worst case scenario. of course there are shitty exchanges like yobit which have probably 99% fake volume but those places are so bad that they are not even worth talking about specially in an statistics.

[o_e_l_e_o]

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.

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.

[dothebeats]

As if most people don't know about this already. The Chinese exchanges were the most notorious platforms when it comes to faking volumes. Not that I'm generalizing it but just look at the orders and market depth at a given time and look at their stats on their own site and CMC. Since 2016, people knew about OKCoin's practice of manipulating displayed volume in order to get a lot of customers into thinking that liquidity is darn buttery-smooth in there, but apparently it isn't.

I mean at this day and age, what exchange do you expect to not fake the volumes anyway? Everyone did it at some point in time.

[Boxwer007]

Here we go:

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

[BTCappu]

What is the proof ?
Hmmm, all I see is someone trying to carry FUD news again to the crypto space for a reason I don't know, I am very sure anyone who came up with this article don't own any coin and the person also posting this here because real coin holders won't spread FUD news because we want to see a bull run in the price of bitcoin and other crypto, and I am very sure that crypto market will experience a bull run this year irregardless of the FUD news we are going to see in the community because users are becoming tired of FUD, it might be true but it's not worth sharing because we already know.

[o_e_l_e_o]

Hmmm, all I see is someone trying to carry FUD news again to the crypto space for a reason I don't know, I am very sure anyone who came up with this article don't own any coin and the person also posting this here because real coin holders won't spread FUD news because we want to see a bull run in the price of bitcoin and other crypto

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.

[Febo]

What is the proof ?
Hmmm, all I see is someone trying to carry FUD news..

Wash trading is quite obvious. It happens on large scale. I am 100% sure. But they used strange system. I am positive it is far from being correct.  I do hope transparency institute that is doing this researches uses different way to figure out legit volume vs wash trading. 

[hulla]

What is the proof ?
Hmmm, all I see is someone trying to carry FUD news again to the crypto space for a reason I don't know, I am very sure anyone who came up with this article don't own any coin and the person also posting this here because real coin holders won't spread FUD news because we want to see a bull run in the price of bitcoin and other crypto, and I am very sure that crypto market will experience a bull run this year irregardless of the FUD news we are going to see in the community because users are becoming tired of FUD, it might be true but it's not worth sharing because we already know.

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.

[pooya87]

As if most people don't know about this already. The Chinese exchanges were the most notorious platforms when it comes to faking volumes.

i think it was made bigger than it really was. of course Chinese exchanges faked volume but i don't think they were doing it more than any other exchange. their volume was so much higher mainly because they didn't have any trading fees and we all know that when fee is zero you can make a lot more trades, even buy and sell to your own orders as a whale to fake things without costing anything so the volume grows ridiculously big without being faked by the exchange.