A few days ago, cryptocurrency platform The TIE analyzed the trading volumes of the top 100 exchanges, and discovered that the volumes on nearly 90% of these exchanges were misrepresented.
The TIE attempted to obtain an understanding of how much the volumes of these exchanges might actually be by comparing the traffic that they had and the total reported volumes. After calculating that the average trading volume of a single website visit was around $591, they noticed that there were discrepancies in reported volumes for almost all of the 100 exchanges.
Some exchanges, fortunately some of the more popular ones, reported a large part of their volumes correctly.
CoinMarketCap, which has attempted to remove any influence of wash trading, now shows a variety of different exchanges, over time, reporting high trading volumes.
At the time of writing, BitMax and OKEx are competing with highly popular exchange Binance in terms of trade volume. These exchanges, according to The TIE, have 0.84% and 5.94% expected trading volumes of their respective reported volumes.
CoinTelegraph previously reported how LBank and Bit-Z had been competing with Binance in terms of trade volume on CoinMarketCap. The expected trading volumes of LBank and Bit-Z are 0.9% and 0.79% of their respective reported volumes, according to the report by The TIE.
Binance, on the other hand, reports roughly 79% expected trading volumes of the total reported volume.
It must be noted that The TIE has not factored in APIs, desktop-based trading and mobile-based trading, which may make up for some of the difference.
However, the TIE has said that while the report might be limited in its inferences, it is more meant to be a “conversation starter” about these issues:
There were limitations to this report including some of the aforementioned, but the point of the exercise was to show those exchanges that appear most suspicious and to start a greater conversation around wash trading, transaction mining, and liquidity.
Last year, the Blockchain Transparency Institute discovered that over 80% of the top 25 BTC pairs on CoinMarketCap was wash traded, and they also reported that wash trading affects 67% of the cryptocurrency market.
While the cryptocurrency market is no stranger to misrepresented financial data, the extent of this problem, as described in the report by The TIE, indicates that there is much to be done about keeping a track of how exchanges operate — or as the Winklevoss twins said, it is “crypto companies that should be regulated, not cryptocurrencies.”