Bithumb, the second biggest crypto exchange by traded volume, is faking up to 94% of the reported trading volume, Forbes exclusively reports today.
This is according to Crypto Exchange Ranks (CER), a crypto exchange rating agency.
According to CER, South Korea-based exchange ranked at the bottom of the top 10 biggest crypto exchanges in the world in September this year. A couple of weeks later, all out of sudden, Bithumb’s reported volume increased around 12 times – from $350 million to $4.4 billion per day.
Picture 1. Biggest crypto exchanges by reported volume in the last 24 hours (Source: Coinmarketcap)
As seen in photo 1, Bithumb ranks second in today’s ranking with a reported volume of more than $1.6 billion. Once the ranking is shifted from “reported” to “adjusted”, Bithumb disappears from the list.
“Judging from our multifaceted investigation on Bithumb charts we see the signs of trade volumes manipulations, specifically, wash trading. Having calculated Price-Volume Correlation, we came to a conclusion that the trade volume performance is not linked to price fluctuation on the exchange”, said Gleb Myrko, marketing lead at CER, to Forbes.
Wash trading is a market manipulation technique where an entity, broker/exchange or investor, buys and sell the asset simultaneously to create artificial movements in the market. This practice is illegal under the U.S. law.
For instance, CER notes that odd trading patterns have been identified, such as the sudden jump in the traded volume, or short activities where the 95% of the daily traded volume is made in the time frame of a few minutes.
Obviously, Bitcoin is the main instrument used in this process, but similar activities have also been noted in cases of LTC, ETC, XMR, ZEC, OMG, and BTG.
On the other hand, Bithumb denied allegations.
“Bithumb is doing nothing to inflate trading volume. Bithumb is not selling mining-based coin. Bithumb is trying to get more customers by providing various promotions just like any other company in the world as a normal business”, it was said in an email to Forbes.
Accordingly, CER plans to disseminate tens of pages of evidence to back up the above-mentioned claims.