The Dark Side Of Cryptocurrency Exchanges Revealed


A cryptocurrency watchdog is trying to clean up how some exchanges report wildly inflated data to boost their profile to unwary investors.

Blockchain Transparency claims many of the top 100 related exchanges practise wash trading.

The aim is to buy and sell coins to mislead the market by luring customers with false data – which is illegal in the USA and many other countries.

However, many exchanges are based outside the States.

Blockchain Transparency also revealed how exchanges manipulate coins with low market capitalisations by accepting tokens that are traded to inflate transaction volumes.

“We have formed transparency partnerships with many data research firms and investor class supporters. In our many interviews with exchange and token executives we have been able to collect very guarded data not available anywhere else in the space,” says the Blockchain Transparency report.

Preying on low market cap coins

“Our initial report on exchange volumes revealed many of the top 100 exchanges on Coinmarketcap’s rankings using wash trading to gain a marketing advantage over their competitors.

“We found many of these exchanges gaining 80-90% of their referral web traffic from Coinmarketcap alone. In our recent token project interviews, we have found this allows these exchanges to ask from five to 60 bitcoin for listing fees.

“We also found many of these exchanges to be preying on low market cap coins which are desperate for the recognition and volume of a top 10 or 25 exchange.

“In many of the crypto projects we spoke with, this also involves supplying the exchange with a large amount of tokens which are then used to massively inflate volume numbers on Coinmarktcap, luring in prospective traders from other exchanges with much lower, but real volume.

“Our research team found many instances where this occurred on most of the exchanges.”

Cryptocurrency exchange rankings – November 2018

Rank Exchange Active users 24h volume Volume per visitor
1 Binance               312,801 $1,028,517,841 $2,137
2 Okex                          105,609 $694,033,109 $1,972
3 Huobi                          101,873 $585,185,056 $1,723
4 Bitfinex                             48,255 $424,401,774 $3,518
5 Bithumb                             48,614 $408,105,869 $3,358
6 HitBTC                             25,752 $327,172,274 $3,811
7 Upbit                             31,187 $259,075,997 $3,323
8 Kraken                             23,889 $110,346,225 $3,002
9 Coinbase                          421,909 $106,113,214 $189
10 Bitstamp                             28,864 $77,132,315 $2,004

Source: Blockchain Transparency

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