The CEO of cryptocurrency exchange Binance, Changpeng Zhao, said in an interview with Cointelegraph on March 27 that recent reports on fake trading volumes are useful for the crypto industry.
CT speaks with Binance and The Tie about fake trade volume reports. Source: Cointelegraph
Zhao, known in the industry as CZ, said that the reports — most recently from Bitwise Asset Management and The Tie — on exchanges widely faking volumes will end up making the whole industry more transparent. He also stressed that the story has nothing to do with CoinMarketCap — one of the most popular crypto rankings websites:
“It’s not so much Coinmarketcap’s fault, everyone tried to blame on them [sic]. But CoinMarketCap has a very simple reporting mechanism where every exchange reports their own data to them, and they just show it.”
CZ also noted that Binance would not argue with CoinMarketCap on Twitter, calling reported encouragement to do so from the community “kind of childish.” Instead, the Malta-based top exchange is reportedly working with CoinMarketCap’s team to solve this issue. CZ also proposed that potential penalties from CoinMarketCap, such as delisting an exchange that was caught faking volumes, could help to solve the problem.
CZ underscored that the company also plans to further encourage high transparency levels industry wide.
Cointelegraph spoke to CZ in the wake of new research from trading analytics platform The Tie, which gathered figures from 97 exchanges. The report stated that the vast majority of the crypto trade volumes claimed to come from users — some 87 percent, to be precise — may not in fact exist.
Commenting on the report to Cointelegraph in the same interview this week, The Tie’s co-founder Joshua Frank said that there’s an easy way to distinguish a legitimate transaction from a fake one. Usually, he explained, users would transfer no more that 1 Bitcoin (BTC) (about $4,000) or even less at a time, while transactions in the $20,000 range reported by some exchanges are unrealistic.
Even more recently, cryptocurrency index fund provider Bitwise Asset Management released a similar report, but focused on Bitcoin trading only. The report, submitted to the United States Securities and Exchange Commission, stated that almost 95 percent of volume on unregulated exchanges appears to be fake or non-economic in nature. Above all, Bitwise accused CoinMarketCap of listing this suspect data and thus generating a fundamentally mistaken impression of the true size of the BTC market.
According to Bitwise, Binance is one of the just ten crypto exchanges out of the 81 it analyzed that has “actual volume.”
Binance is currently the largest crypto exchange by adjusted daily trade volume on CoinMarketCap, seeing $1.1 billion in trades on the day to press time.
Article First Published here