Blockchain Transparency Institute Finds Wash Trading on Binance

Malta-based cryptocurrency exchange Binance – one of the largest in the world in terms of volume – has been named in the Blockchain Transparency Insitute’s April 2019 Market Surveillance Report as one of the exchanges on which wash trading has occurred.

Wash trading, which describes the act of simultaneously buying and selling an asset in order to falsely drive up trading volume, remains a major problem in the cryptocurrency industry.

The Blockchain Transparency Institute’s report claimed that “17 of the CMC Top 25 exchanges to be over 99%+ fake with many greater than 99.5% fake volumes, including 35 of the top 50 adjusted volume rankings… Over 60% of all exchanges ranked on popular data sites have little to no volume and were found to be over 96% fake each.”

The findings were even more serious than the report that Bitwise delivered to the SEC, which claimed that 95 percent of Bitcoin trading volume is fake.

As a result of the findings, CoinMarketCap has announced that it will be revamping the metrics it uses to measure and report trading volume.

Wash Trading Affects Everyone in the Ecosystem

Alon Karniel, COO of algorithmic crypto trading company Algoz, explained in an interview to Finance Magnates last month that some exchanges employ wash trading methods in order to make themselves more attractive to new projects who may be willing to pay higher listing fees.

Cryptocurrencies themselves or malicious traders who are seeking to pump up the value of an asset may also employ wash trading in order to cause unwitting investors to buy them up, driving up the price for a pump-and-dump scheme.

Either way, fake volume is damaging for investors and projects alike. “If I’m an investor looking to invest in a crypto project…one of the most important things is that if I want to invest $1 million, I want to make sure that I can sell $1 million in the exchanges,” Karniel explained. If volume is fake, however, investors could find themselves in seriously hot water.

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