Why do exchanges get away with faking trade volume?

mersal

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Quote from: NotATether on August 08, 2020, 06:24:26 AM

Does anyone else agree that it's way too easy to open an exchange nowadays, you just assemble a team and buy some trading platform software from a third party and set up your site, compliance be damned. And then some of them do things like listing scamcoins that can be predicted to become worthless, ripping off investors. If a stock were to do this, their owners would go to jail.

And then other exchanges blatantly misreport their trading volume as much higher than it actually is. If a regulated forex platform would to do this, they would be heavily fined.

Sure forex has their own share of scam platforms but in my opinion it is way too easy to set up an crypto exchange without worrying about the legal aspects. There should be more scrutiny and regulation around exchanges.

Its easy to make an exchange on your own but it is not going to be easier to make people trading on it, even the exchanges are legit and promoting them for huge money are struggling to get their traders.And exchanges with low transaction and withdrawal fees attract the users more.

And about the fake volume, because they wanted to make into the top of the list so they are giving fake volume for most of the coins by trading internally with their bots just to record the orders.

Spaffin

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Quote from: bearexin on August 12, 2020, 09:51:38 AM

Because nobody can stop them? I mean that looks like the only reason at all, if there was power of people that could stop exchanges stop doing that, I would think that we would all do it, however there is no way that people could stop it, neither does the competition so they end up doing it without any consequences.

On top of that, when one place does it and others don't, that place gets an advantage and everyone thinks they are doing great, however other places wouldn't accept it, so they end up doing it to level the playing field as well, which is why right now it is so common since places basically all try to mimic each others shady stuff in order to get ahead but if not at least not stay behind. All of this could end if somehow there is regulations on them.

All kinds of manipulations with trading volumes, this is a kind of fraud on the part of the management of the cryptocurrency exchange. I believe that their actions may fall under some article of the Criminal Code, but whether they can be held accountable is a completely different issue that requires careful study.

bearexin

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Because nobody can stop them? I mean that looks like the only reason at all, if there was power of people that could stop exchanges stop doing that, I would think that we would all do it, however there is no way that people could stop it, neither does the competition so they end up doing it without any consequences.

On top of that, when one place does it and others don't, that place gets an advantage and everyone thinks they are doing great, however other places wouldn't accept it, so they end up doing it to level the playing field as well, which is why right now it is so common since places basically all try to mimic each others shady stuff in order to get ahead but if not at least not stay behind. All of this could end if somehow there is regulations on them.

Dorodha

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In making new exchanges we need to be careful about trading volumes and be careful In the case of trade these are not equally affected everywhere. Due to the dependence of the trading volume the exchanges move away with the amount of fake trade. Having knowledge of other sites will reduce the risk and it will be much easier to find good promotions every site has a specific logo. If you follow the logo it is very difficult to copy.

imstillthebest

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Quote from: Shasha80 on August 11, 2020, 06:52:37 PM

If you look at the number of exchanges currently in circulation it has proven that opening exchanges is very easy.
But it's not easy to draw interest of many users, there should be a good promotion to make more users join the new
exchanges. One way to attract interest users by making faking trade volume. Because some users especially newbies
choose exchanges based on trading volume, even though they are nowadays easily manipulate trading volume with bots.
So avoid choosing exchanges based on volume trading.

volume is essential when trade and if not volume , what would be the next thing to look for ? with the huge number of scams thats a way to tell that they can attract people easily .

so many exchanges that are fake are already got busted , mostly with the issue of fake volume . they didnt get away with it . if only people will only buy and sell coins on the trusted exchange no one will get scam , thats also thier fault .

Shasha80

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If you look at the number of exchanges currently in circulation it has proven that opening exchanges is very easy.
But it's not easy to draw interest of many users, there should be a good promotion to make more users join the new
exchanges. One way to attract interest users by making faking trade volume. Because some users especially newbies
choose exchanges based on trading volume, even though they are nowadays easily manipulate trading volume with bots.
So avoid choosing exchanges based on volume trading.

carlfebz2

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Quote from: Kelvinid on August 11, 2020, 12:17:32 PM

We can't make all things to be good to be true. That is in a real case scenario.

And with that fake volume show some interest to the people, definitely, it makes sense but seeing a bad effect on it, not only in a particular exchanger who abuses that but as crypto in general. This why newcomers have that struggles to find good and reputable exchangers because if we just search online, a lot or exchanges showing impressive reviews, a huge market volume which is really enticing.

It is really tricky and it makes a reason why people badly slip into fake exchangers with fake volume as being manipulated.

For people that dont have much time on making out some searches would definitely end up on exchangers which arent that known.Yeah you're right that faking out numbers will really give out

impact which people do really have that kind of impression that theyre dealing with a good one since it do shows huge volume which can signifies that there are lots of users

who do trade on such place.sooner or later that user will surely realize that he had dealt on the wrong place.This is why its important to have verification from time to time.

wxa7115

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Quote from: NotATether on August 08, 2020, 06:24:26 AM

Does anyone else agree that it's way too easy to open an exchange nowadays, you just assemble a team and buy some trading platform software from a third party and set up your site, compliance be damned. And then some of them do things like listing scamcoins that can be predicted to become worthless, ripping off investors. If a stock were to do this, their owners would go to jail.

And then other exchanges blatantly misreport their trading volume as much higher than it actually is. If a regulated forex platform would to do this, they would be heavily fined.

Sure forex has their own share of scam platforms but in my opinion it is way too easy to set up an crypto exchange without worrying about the legal aspects. There should be more scrutiny and regulation around exchanges.

This is not as difficult to guess, exchanges can get away with it because many users decide to turn a blind eye, if you want to use one of the most reputable exchanges out there you're probably going to have to go through know your customer policies and even if you don't have to go through those policies you will not have access to all kind of exotic coins that are out there.

Traders and investors decide to ignore the fake volume because they prefer to avoid know your customer policies and to trade coins that we know will crash in a matter of weeks or months with the hope of being one of the few that earn money out of those coins, as you can see the old model of supply and demand is at work, so if there was not a demand for exchanges like that then they will not exist.

Kelvinid

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We can't make all things to be good to be true. That is in a real case scenario.

And with that fake volume show some interest to the people, definitely, it makes sense but seeing a bad effect on it, not only in a particular exchanger who abuses that but as crypto in general. This why newcomers have that struggles to find good and reputable exchangers because if we just search online, a lot or exchanges showing impressive reviews, a huge market volume which is really enticing.

It is really tricky and it makes a reason why people badly slip into fake exchangers with fake volume as being manipulated.

tvplus006

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Quote from: carlisle1 on August 09, 2020, 11:42:20 AM

Quote from: Mpamaegbu on August 09, 2020, 10:41:23 AM

I have wondered this too myself on why exchanges playing this deceit of falseness with trading volume are left unpunished. It's a burden on the entire crypto space.

Exchange are doing this to attract traders to use their platforms, you will only realized this once you are already being trapped, there's a big need of doing your research about both the projects and the exchange that you'll going to use before you take your chance to avoid losing your money.

I didn't notice when this feature appeared on Coinmarketcap, but a couple of days ago I was surprised by this rating. This way you can track the volume of coins you are interested in on various exchanges. But I would be interested to know how coinmarketcap calculates these values.

Harlot

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Quote from: Mahanton on August 10, 2020, 04:54:03 PM

Quote from: Harlot on August 10, 2020, 11:04:56 AM

I do think you are talking about unlicensed exchanges here since they can easily get away with it without any authorities noticing it. For licensed and legally operating exchanges it will be harder for them to cheat and mislead their users as their data is always monitored by their country's SEC. I know that if they have produced fake volume on their exchanges they will be investigated right away since users will also report/complain about it. For unlicensed exchanges where they will barely have any customers will really get away with this since they aren't part of any surveillance like what a legal company is always is.

Centralized exchangers do really abide with some laws and regulations which the thing you said was actually right but they arent really that strict compared to forex/stocks
market which manipulation isnt really that too obvious but its surely there its surely does exist.The thing here on crypto is that it cant really be that detected since
we do have huge volume plus having lots of coins that had been traded on where each user wont really bothering that much when it comes to an exchange liquidity
or volume.Back in the past where there are reports about wash trading which isnt really that surprising to happen into this market.

Having "huge volumes" in an exchange isn't really a factor here if it is this will make it easier for the authorities to track them down as faking larger volumes of traders will be make it easier for them to catch the manipulation going on. Take US for example a bunch of analysis companies are helping them like Chainalysis this company has help them a lot on not only tracking down criminals but also anomalies and discrepancies happening in registered exchanges. With crypto exchanges being more regulated I doubt that they can even do large scale of data manipulation knowing that they are always someone's radar.

BALIK

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Because they set up their companies in countries that don't give a flying fuck about what they do.

If this was a traditional trading platform, these wash trading exchange would be shut down immediately and the founders and participants would be charged with market manipulation. But because cryptocurrencies aren't regulated in most places, the government just doesn't care.

Plus, people continue to trade on these platforms, either because they're not aware that they are wash trading or because they somehow think it doesn't affect them.

I personally think CoinMarketCap, CoinGecko, and similar platforms are largely to blame for the continued success of exchanges that fake their volume. They should have a big bold stamp next to any exchange that has been proven to boost its volumes with dubious practices like wash trading. They are one of the main sources newbies use to find trading pairs and new exchanges, it is their duty to provide this information.

Mahanton

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Quote from: Harlot on August 10, 2020, 11:04:56 AM

I do think you are talking about unlicensed exchanges here since they can easily get away with it without any authorities noticing it. For licensed and legally operating exchanges it will be harder for them to cheat and mislead their users as their data is always monitored by their country's SEC. I know that if they have produced fake volume on their exchanges they will be investigated right away since users will also report/complain about it. For unlicensed exchanges where they will barely have any customers will really get away with this since they aren't part of any surveillance like what a legal company is always is.

Centralized exchangers do really abide with some laws and regulations which the thing you said was actually right but they arent really that strict compared to forex/stocks
market which manipulation isnt really that too obvious but its surely there its surely does exist.The thing here on crypto is that it cant really be that detected since
we do have huge volume plus having lots of coins that had been traded on where each user wont really bothering that much when it comes to an exchange liquidity
or volume.Back in the past where there are reports about wash trading which isnt really that surprising to happen into this market.

Harlot

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I do think you are talking about unlicensed exchanges here since they can easily get away with it without any authorities noticing it. For licensed and legally operating exchanges it will be harder for them to cheat and mislead their users as their data is always monitored by their country's SEC. I know that if they have produced fake volume on their exchanges they will be investigated right away since users will also report/complain about it. For unlicensed exchanges where they will barely have any customers will really get away with this since they aren't part of any surveillance like what a legal company is always is.

tvplus006

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I have already thought about this question before and the only correct solution to this problem is that Coinmarketcap must have its own bot on each exchange to correctly enter data about volumes in the rating. But given that the rating is owned by Binance, it may look like espionage.

Akiko

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Quote from: DevilSlayer on August 10, 2020, 02:51:56 AM

Actually it is easy to identify if a certain exchanges are saying the truth or they keep making illusion in order to create fake volume by looking at the bids and asks board where there should be no gap and the tick should be close to each other, the reason why some exchanges are creating fake volume is simply because they want to create hype where they want many traders to use their exchange. Fake volume is a threat especially if we have large capital because we can be stuck if there is low liquidity.

there is also other reason like many project here is looking to be listed in exchange that have a high daily volume .they make it to have more potential customer from a project that looking for an exchange that they will list a project and asked only small fees for listing .,And newly project can easily fall in that since that is what they are looking .

Its easy to identify however not all is willing to take some time to check it.

DevilSlayer

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Quote from: MCobian on August 10, 2020, 02:27:56 AM

Many people choose exchanges based on trading volume, but not all trading volume are real. You should not choose exchanges
based on trading volume, because it is easy to manipulate trading volume. It is true that it is very easy to open new exchanges,
But for the exchanges you have a lot of users it is very difficult. Because a good promotion is needed and also must a listing of
profitable coins. Regarding the legality of being able to choose centralized exchanges, usually already regulated by the government.
It is true that centralized exchanges are safer, but we are obliged to provide KYC procedures.

Actually it is easy to identify if a certain exchanges are saying the truth or they keep making illusion in order to create fake volume by looking at the bids and asks board where there should be no gap and the tick should be close to each other, the reason why some exchanges are creating fake volume is simply because they want to create hype where they want many traders to use their exchange. Fake volume is a threat especially if we have large capital because we can be stuck if there is low liquidity.

MCobian

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Many people choose exchanges based on trading volume, but not all trading volume are real. You should not choose exchanges
based on trading volume, because it is easy to manipulate trading volume. It is true that it is very easy to open new exchanges,
But for the exchanges you have a lot of users it is very difficult. Because a good promotion is needed and also must a listing of
profitable coins. Regarding the legality of being able to choose centralized exchanges, usually already regulated by the government.
It is true that centralized exchanges are safer, but we are obliged to provide KYC procedures.

Mpamaegbu

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Quote from: carlisle1 on August 09, 2020, 11:42:20 AM

Quote from: Mpamaegbu on August 09, 2020, 10:41:23 AM

I have wondered this too myself on why exchanges playing this deceit of falseness with trading volume are left unpunished. It's a burden on the entire crypto space.

Exchange are doing this to attract traders to use their platforms.

But of course, it's obvious. But my concern is why can't these defaulting exchanges be punished and exposed?

Quote from: carlisle1 on August 09, 2020, 11:42:20 AM

...there's a big need of doing your research about both the projects and the exchange that you'll going to use before you take your chance to avoid losing your money.

Honestly, this DYOR thing people keep hammering here is not that easy as they paint the picture. It takes an experienced person to carry out, not just any person. Otherwise, all one's efforts attempting the DYOR thing would be one merely staring at websites. We shouldn't also be in a hurry to forget that even veteran members here also get caught in this web of deceit while in research too.

Twentyonepaylots

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Quote from: Charles-Tim on August 08, 2020, 06:49:49 AM

Quote from: NotATether on August 08, 2020, 06:24:26 AM

Does anyone else agree that it's way too easy to open an exchange nowadays,

It is not easy to open a safe and reputed exchange, but can be easy for scammers to set up a fake exchange.

Scammers these days are skilled and wise, they are ready to fake an exchange though it is hard that one, hard to get a client but that's they thing, if they fail they'll just have to move on and yes they got a lot of fund, they just keep upgrading and upgrading their schemes out of the money they got from the past scams. It ain't easy to open an exchange nowadays, I must say.

Quote from: Charles-Tim on August 08, 2020, 06:49:49 AM

Quote from: NotATether on August 08, 2020, 06:24:26 AM

And then some of them do things like listing scamcoins that can be predicted to become worthless, ripping off investors. If a stock were to do this, their owners would go to jail.

There are scam in forex too but no opportunity to create new fiat money as all are centralized and owned by countries. Unlike, cryptocurrencies, they are decentrlaized and can be created by anybody, that is why some are subjected to pump and dump.

This is why investors have quit investing, this is true actually and I pity those projects that is legitimate but lacks of support coz most of investors think that it is a another scam project.

Quote from: Charles-Tim on August 08, 2020, 06:49:49 AM

Quote from: NotATether on August 08, 2020, 06:24:26 AM

And then other exchanges blatantly misreport their trading volume as much higher than it actually is. If a regulated forex platform would to do this, they would be heavily fined.

That does not mean it is not happening in forex, a lot of scams that happen in crypto is occuring in forex too

Quote from: NotATether on August 08, 2020, 06:24:26 AM

Sure forex has their own share of scam platforms but in my opinion it is way too easy to set up an crypto exchange without worrying about the legal aspects. There should be more scrutiny and regulation around exchanges.

Imo, if you are talking about centralized crypto exchanges, they are also well regulated but there are some ways scam can be legit, a good example is the puming and dumping of coin. Aside forex, let me use a well reguated organization for you, have service sim provider scammed you before? They can scam people with as little as $0.1 dollar, why government never done anything?

Imo, not that crypto exchanges are not regulated, there are shady scam in forex too and it is everywhere like that. It is we that should be careful.

Scams are everywhere and we all should be wary of that, not just in forex, not just in crypto, even in real life, so it is better to have an actual knowledge than just knowing what a scam is.

Topic: Why do exchanges get away with faking trade volume? (Read 400 times)