Independent research conducted by TIE, developed in partnership with Social Market Analytics suggests that 59% of the exchanges have falsified their trading volume data by more than 90%.
The Research Parameters and Technique Implemented
The chart below shows reported trading volumes per exchange vs. monthly web visitors. While exchanges like #Kraken, #Binance, and #Coinbase show similarities between viewership and trading volume, others like Coinbene and ZBG have suspiciously high reported volume vs. views. pic.twitter.com/7Q0jBRNj9Y
— The TIE (@TheTIEIO) March 18, 2019
The organization made a comparison between the website viewership metric and the reported trading volume on exchanges. Furthermore, when they calculated the amount of money per user in the Exchanges, they found considerable discrepancies in the records.
For Example, while Binance reported $750 traded per visit, DOBI reported a whopping $356,625
Furthermore, an average of $591 per visit was estimated on websites like Binance, Coinbase, and Bitfinex.
We selected these exchanges because of large usage among institutions, reputation within the market, and because their web viewership appeared consistent with their reported trading volumes.
This estimated formed the benchmark for test on other exchanges as well. Surprisingly, more than 75% of the Exchanges reported trading volumes double of what is expected.
The total estimated suspicious volume on the exchanges is 87%.
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 $2.1B per day. Currently that number is being reported as $15.9B. pic.twitter.com/jZzezJMmKk
— The TIE (@TheTIEIO) March 18, 2019
Exchanges to trust
According to the report Exchange which maintained parity with the reported trading volume and expected trading volume are Binance, Bitfinex, Coinbase, Kraken, Bitstamp, Gate.io, Bittrex, Gemini Poloniex, Coindeal, and so on.
The research was conducted on over 100 exchanges. Since 75% of them were found of falsifying data, the trust and support for these exchanges are sure to grow in the future.
Exchanges not to be trusted
While Okex is currently ranked one on coinmarketcap.com‘s list of exchanges according to trade volume, the report suggests that more than 90% of the data on Okex might be suspicious. Other popular Exchanges that made the red or caution list were Bit-z, Coinbene HitBTC, bw.com, Coineal, LBank, Bibox, and so on.
Need for Regulation
The report by TIE not only brings ominous news to the crypto-community but also revisits the need for regulation of Exchanges. While the largest economies of the world have cracked down on some cryptocurrency based platforms, some exchanges continue to gain limelight by falsifying volume data; an unethical practice.
A revelation of this kind can hurt the price of Bitcoin and other cryptocurrencies adversely. However, the unreported volumes of OTC trade around the world buffer the effect of false amounts reported on Exchanges.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com