2019 09 Crypto Exchange Wash Trading Research

TI Research

After several months of due diligence, TokenInsight as a blockchain data and technology-driven third-party research agency has completed its analysis on the real trading volumes of the different cryptocurrency exchanges. This report aims to promote transparency within the cryptocurrency industry and develop an objective and fairer market trading environment. We believe that there is no current method or model that can perfectly detect wash trading, however, we hope to provide more information to the market through this study. Thus, we have completely disclosed our data and research methods and framework; and we honestly accept the criticism and questioning of our analysis. Anyone is welcome to reach out and discuss our findings. TokenInsight's philosophy is to: Find, Create and Spread Value in Blockchain. We do believe that truth is the most precious value.

Key Points

  1. According to a report submitted to the U.S. SEC by Bitwise in March 2019, "wash trading" is currently a profoundly severe problem which exists in the cryptocurrency market. It was stated that the true trading volume of the overall market accounted for only roughly 4.5% of reported volumes, and only ten exchanges have reported figures representing true trading volume. The report exposing the wash trading was made public by the research institution for the first time, and it shocked all the market participants.
  2. In resistance to Bitwise's report, most cryptocurrency exchanges have made significant efforts to advance their “wash trading” algorithms to avoid further detection. Some exchanges have even gone as far as developing technical improvements directly from the detection methods published in the Bitwise report. All this has led to even more fragmentation in the market and confusion for traders in understanding accurate market volumes.
  3. Alameda Research, a market maker and provider of over-the-counter trading services, published a research report on July 2019 and has continuously released market reports that monitor true trading volume data. Their results show that 66.4% (Sep. 25, 2019) of the trading volume from the cryptocurrency market is wash trading. Due to the limitations of their evaluation model, Alameda Research has only been able to draw three conclusions to the authenticity of exchange trading volumes: reliable, 50% reliable and unreliable.
  4. The difficult part to identify the wash trading is unable to collect data from exchanges for regular investor
  5. As a leading digital token rating and research agency, TokenInsight spares no effort to establish its own data center based on the interests of investors and has recorded the transactions of 30 mainstream exchanges in periods from 10:30 on June 26, 2019, to 23:55 on July 28, 2019. Later, we conducted a qualitative and quantitative analysis of the "wash trading" by using power-law based quantitative model and two comparative analysis methods.
  6. According to our analysis, some of the non-top-tier exchanges continue to show serious "wash trading" issues.
  7. Wash trading detection and monitoring will be launched on TokenInsight's official website in the upcoming future. Individuals can use this page to view the real-time wash trading volume of cryptocurrency exchanges. As we continue to develop our models for identifying wash trading behavior, TokenInsight will continue to provide complimentary reports that supplement our findings to the market.

To acquire the full report and wash trading level of exchanges, click on the PDF icon at the top right of this page.

TI Research

TokenInsight is a data and research organization for the digital asset market. TI provides comprehensive asset-related data and comprehensive and timely information and research services for digital assets.

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