Crypto Wash Trading - Concerns? | Bitcointalksearch.org

cabron

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Quote from: amishmanish on November 18, 2021, 11:31:25 AM

Quote from: ?? on ??

You will find wash trading in good exchange that have full KYC and SEC watch. Don't be surprised if the ratio is so high especially since many platforms do not require identity verification from users and therefore there is rarely high control with the complete absence of all regulatory legislation especially with multi-state platforms.
You need to ask about how many bitcoin wash trading compared to altcoins and you will find its rate less than altcoins and it is difference between good/high volums exhanges and unknown ones

Is it just me or does anybody else notice the vastly inferior quality of posts by "hugeblack" over last sometime? I don't really like to pick up fights but I think this account was pretty well-read and had a good writing style. Whatever happeed.

Concerning Wash trading, this is just another one of those "things" about crypto that get discussed endlessly just because they are just evolving. Wash trading refers to bots buying and selling constantly on an exchange to make it appear like there is huge volume (Amount of Buys/ sells taking place). Stuff like this happens because the market participants in crypto don't really have actual information to judge a project with, like what have they delivered? What is the distribution, whether its a legitimate team...All that stuff doesn't matter.

People want hype and the assurance of a CEX listing with the illusion of trading. Thus the scammers opt for this tactic. This is just stuff copied from the traditional markets so nothing to see there.

Its just that there needs to be some kind of cap at how many products of the same type can launch and how anon can a team be. With the memecoins and rug-pulls, its as if there is no limit to the appetite for risky products..

These meme coins are probably used to make it appear like the volume is huge. No wonder they are listed on big exchanges despite how useless they are. Shibinu had created a not of them after it like the Floki but then it's the same thing yet listed on different exchanges.

If it increases the volume of the exchanges, they're rank high on the list of exchanges like on CMC. I guess it's thier way of promoting themselves too. I use to see Vindax and P2pB2B on top before binance bought the CMC. Now they are way 100.

Fortify

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Quote from: titular on November 17, 2021, 09:26:52 PM

This article written in August this year from Cornell University theorize that over 70% of the volume in the top 29 cryptocurrency exchanges is fraudulent wash trading.

The paper discusses issues relating to the large volume of wash trading done on top crypto exchanges for various reasons:

Quote

Abstract

We introduce systematic tests exploiting robust statistical and behavioral patterns in trading to detect
fake transactions on 29 cryptocurrency exchanges. Regulated exchanges feature patterns consistently
observed in financial markets and nature; abnormal first-significant-digit distributions, size rounding,
and transaction tail distributions on unregulated exchanges reveal rampant manipulations unlikely
driven by strategy or exchange heterogeneity. We quantify the wash trading on each unregulated
exchange, which averaged over 70% of the reported volume. We further document how these
fabricated volumes (trillions of dollars annually) improve exchange ranking, temporarily distort prices,
and relate to exchange characteristics (e.g., age and userbase), market conditions, and regulation.

Is this something that you guys have been aware of as an issue for some time? Is this even really an issue at all?

In my view, this kind of wash trading is being done to increase/maintain an exchange's 'rank', not to manipulate price. Exchanges will do next to anything to keep their brand relevant and keep customers using their platform.

Could pumping the volume like this really affect any coin's price? Could this kind of trading be dangerous to the market in any way?

Paper Link: https://arxiv.org/pdf/2108.10984

It sounds to me that people are using terms outside of the intended usage. Wash trading refers to stocks and has little relevance to crypto in this context. In fact it translates poorly into cryptocurrency because there are relatively high transaction fees which are lost to the party doing the trading - the more you trade, the more you lose and there is little gain to be had. In the stock market world the amount of trading going on has little impact on the price and is usually a reaction to good news rather than the driver for it. In cryptocurrency it has even less impact on the price for the majority of people investing in Bitcoin, so I very much doubt it is near the 70% mark. It's not like the exchanges are getting any benefit from this activity either as the activity would only be influenced by customer transactions.

AakZaki

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Quote from: PrivacyG on November 18, 2021, 12:00:40 PM

I disagree. I challenge anyone here to create an account or MXC or CoinEX, both accepting non-KYC deposits and withdrawals, and try to place a buy order. The price will immediately start moving way above your buy order. I had moments during which the market falsely appeared ultra bullish: the price had a 20% premium compared to any other exchange. 20% within minutes and this happens every single time I try to buy off their exchange. It is obvious price manipulation and this is sadly happening even as we speak.

-
Regards,
PrivacyG

Such price manipulation on several exchanges such as MXC, CoinEX and even Hotbit is also included, it is a common practice to maintain trading volume. Pump and dump flash always happen, it's all done by Bots that are already set up to make those trades.
Manipulation will always happen wherever it is.

tbct_mt2

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It is old, current and future issue. With the advance of technology, trading nowadays are different than years ago.

Nowadays, bots are everywhere and many people use bot. If you are whales and manipulate the market, do you want to spend your time 24/7 to stay in front of computer screen?

Bots are there to help and bot users love it.

Bitwise Asset Management - Presentation to the U.S. Securities and Exchange Commission
Bitcoin volume validator

dothebeats

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Wash trading in crypto has been around for the longest of time. It's so common that a lot of people don't really care about such activities from happening, although in recent times wash trading in bitcoin has been frowned upon and may even lead to sanctions given how huge the effect of such activity in the market. There are still lots of small exchanges doing this up to now, and you'll notice that even the obscurest of coins have the largest of volumes when compared to the top coins on their platform.

I think that the report has some elements of exaggeration in them. If top exchanges do this today, they'd be in hot water and will immediately be questioned for their actions. But perhaps those exchanges at the top of the ladder do this still, although in ways that one cannot easily notice.

Slow death

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this is a big exaggeration, I understand that there is money laundering, I understand that there are exchanges that have fake volume but these article numbers are too high numbers, the real situation should not be as alarming as these numbers presented in the article. there is KYC on many exchanges and withdrawal limits on many exchanges are small if the person did not do KYC so I doubt that someone who stole a lot of money would put it on an exchange, I also doubt that the coinmarketcap would put it on the top exchanges with fake volume

Ararbermas

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Actually there's a bunch of exchanges out there using fake volume except those high rating and trusted exchange. that's why for me its always good to make research especially on this sites such coinmarketcap, CoinGecko because they really provide good services when it comes listing, reasons until now many traders and investors relies on them wherein just to figure it out if the information in some exchanges are accurate or not.. Its very common now actually that many scam exchanges using fake volume and information in order to get more attention in the internet.. So be aware guys and always make research!

Anonylz

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Many exchanges engage in wash trading to keep up a front, this is no longer news, so far I don't think it has a direct impact on the market for the exchange in question will appear as a high volume exchange whereas it is all fake,
I think sometimes ago, the sec was cracking down on exchanges who engage in wash trading but I am not sure what is their stand regarding it. Binance has a huge user base so it's kinda legit if they claim the exchange doesn't engage in wash trading.

Stedsm

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Wow, this is what I was much more interested in learning about, since I participated in a coin's trading contest at Binance.

For those who don't know, wash trading is where a trader usually sells at his own buy orders to generate fake trades in markets.

Binance itself claims to be the only exchange that counters wash trading as it is deemed to be illegal everywhere and says that they are against it and won't allow it at any cost. But I believe that they too involve this type of trading, else how do they manage to maintain that huge volume on a daily basis?

P.S.: I'd like to know that if I simply buy and sell (not do like I said above), will it be considered as wash trading?

Tytanowy Janusz

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Quote from: PrivacyG on November 18, 2021, 12:00:40 PM

Quote from: titular on November 17, 2021, 09:26:52 PM

In my view, this kind of wash trading is being done to increase/maintain an exchange's 'rank', not to manipulate price. Exchanges will do next to anything to keep their brand relevant and keep customers using their platform.

I disagree. I challenge anyone here to create an account or MXC or CoinEX, both accepting non-KYC deposits and withdrawals, and try to place a buy order. The price will immediately start moving way above your buy order. I had moments during which the market falsely appeared ultra bullish: the price had a 20% premium compared to any other exchange. 20% within minutes and this happens every single time I try to buy off their exchange. It is obvious price manipulation and this is sadly happening even as we speak.

-
Regards,
PrivacyG

Its not "The price will immediately start moving way above your buy order". Price is not moving anywhere. Those are shitty exchanges without any real traffic, coin that you tried to trade is most likely dead too. Order books are empty, filled with fake orders and exchange create fake trades between 2 fake orders in orderbook to boost its total volume to boost its rang on coinmarketcap. When you place your order exchange has to make fake trades a little bit higher to not fill your order.

As OP said this fake volume is mostly done by exchange to "increase/maintain an exchange's 'rank'," ... well at least majority. I know few coins that uses dev's founds to boost volume on pancakeswap (DEX). I doubt that pancakeswap is doing it on its own.

PrivacyG

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Quote from: titular on November 17, 2021, 09:26:52 PM

In my view, this kind of wash trading is being done to increase/maintain an exchange's 'rank', not to manipulate price. Exchanges will do next to anything to keep their brand relevant and keep customers using their platform.

I disagree. I challenge anyone here to create an account or MXC or CoinEX, both accepting non-KYC deposits and withdrawals, and try to place a buy order. The price will immediately start moving way above your buy order. I had moments during which the market falsely appeared ultra bullish: the price had a 20% premium compared to any other exchange. 20% within minutes and this happens every single time I try to buy off their exchange. It is obvious price manipulation and this is sadly happening even as we speak.

-
Regards,
PrivacyG

amishmanish

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Quote from: ?? on ??

You will find wash trading in good exchange that have full KYC and SEC watch. Don't be surprised if the ratio is so high especially since many platforms do not require identity verification from users and therefore there is rarely high control with the complete absence of all regulatory legislation especially with multi-state platforms.
You need to ask about how many bitcoin wash trading compared to altcoins and you will find its rate less than altcoins and it is difference between good/high volums exhanges and unknown ones

Is it just me or does anybody else notice the vastly inferior quality of posts by "hugeblack" over last sometime? I don't really like to pick up fights but I think this account was pretty well-read and had a good writing style. Whatever happeed.

Concerning Wash trading, this is just another one of those "things" about crypto that get discussed endlessly just because they are just evolving. Wash trading refers to bots buying and selling constantly on an exchange to make it appear like there is huge volume (Amount of Buys/ sells taking place). Stuff like this happens because the market participants in crypto don't really have actual information to judge a project with, like what have they delivered? What is the distribution, whether its a legitimate team...All that stuff doesn't matter.

People want hype and the assurance of a CEX listing with the illusion of trading. Thus the scammers opt for this tactic. This is just stuff copied from the traditional markets so nothing to see there.

Its just that there needs to be some kind of cap at how many products of the same type can launch and how anon can a team be. With the memecoins and rug-pulls, its as if there is no limit to the appetite for risky products..

Darker45

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Yes, this has been a thing way back then. In a way, this was easy to detect. You simply look at the volume of a crypto exchange which is pretty much unheard of and you will be dumbfounded of how high it is. And there were so many of them. For me, the fact that almost all exchanges reflect figures of wash trading in different degrees was the reason why this somehow became more or less a non-issue.

But this doesn't involve exchanges only; this also involves projects trying to make it appear to the market that it has a pretty active token or coin. So this is not just about exchanges trying to rise through the ranks. This is also about projects and their devs trying to fake trading pair activities.

I think this affects the price but only indirectly, by attracting traders. Of course, this is dangerous. Once this scheme is successful or significant real volume is established, the manipulators could easily dump what they have.

titular

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"Stop using proprietary software."

This article written in August this year from Cornell University theorize that over 70% of the volume in the top 29 cryptocurrency exchanges is fraudulent wash trading.

The paper discusses issues relating to the large volume of wash trading done on top crypto exchanges for various reasons:

Quote

Abstract

We introduce systematic tests exploiting robust statistical and behavioral patterns in trading to detect
fake transactions on 29 cryptocurrency exchanges. Regulated exchanges feature patterns consistently
observed in financial markets and nature; abnormal first-significant-digit distributions, size rounding,
and transaction tail distributions on unregulated exchanges reveal rampant manipulations unlikely
driven by strategy or exchange heterogeneity. We quantify the wash trading on each unregulated
exchange, which averaged over 70% of the reported volume. We further document how these
fabricated volumes (trillions of dollars annually) improve exchange ranking, temporarily distort prices,
and relate to exchange characteristics (e.g., age and userbase), market conditions, and regulation.

Is this something that you guys have been aware of as an issue for some time? Is this even really an issue at all?

In my view, this kind of wash trading is being done to increase/maintain an exchange's 'rank', not to manipulate price. Exchanges will do next to anything to keep their brand relevant and keep customers using their platform.

Could pumping the volume like this really affect any coin's price? Could this kind of trading be dangerous to the market in any way?

Paper Link: https://arxiv.org/pdf/2108.10984

Topic: Crypto Wash Trading - Concerns? (Read 223 times)