Exchanges have faced a tough time since the onset of the crypto-winter. However, as an investigation by The Tie suggests, some exchanges have taken to faking trading volumes and attracting users to their platform.
The Tie tweeted the report of their investigation, a report that concluded by stating very few exchanges did not fake trading volume, while most of the exchanges faked trading volumes. Most of the users’ go-to page for info about cryptocurrencies and exchanges was CoinMarketCap. Hence, exchanges listed on CMC faked volume to attract more users to its platform.
The Tie fetched the number of web views using Similar Web, and divided the same with the trading volume reported by these exchanges. This gave the reported volume per visit. To create a standard for comparison, The Tie selected Binance, Coinbase Pro, Poloniex, Gemini, and Kraken, and calculated the weighted average of trading volumes, which amounted to $591, per web visit.
The obtained figure, $591, was then multiplied with web views, which gave the expected volume of the exchanges. Comparing this to the reported volume provided proof of how exchanges fake their trading volumes.
The attached report showed the same. Some of the culprits, according to The Tie’s report, included BitMAX, Lbank, BW, and ZBG. In fact, the investigation found that the expected volume was lower than 1% of these exchange’s reported volume.
The Tie stated,
“When we divided the top 100 exchanges’ expected by their reported volumes, we found that 59% of exchanges’ reported volumes were over 10 times higher than what we would have expected had they similar volume per visit to Coinbase, Binance, Kraken and others.”
The chart attached below shows the same, with the bars colored in red indicating the exchanges whose reported volume was double the expected volume.