- Bithumb has been accused of faking its trading volume by CER
- CER claims Bithumb used wash trading to inflate their numbers
- Bithumb has denied these claims
Bithumb has been accused of faking a large percentage of the trading volume over this past summer.
This accusation comes from CER, a Cryptocurrency exchange rating agency who claim that trading volumes of over 70% were faked.
Bithumb is the second largest Exchange in the world by trading volume.
The Alleged Fraud
CER states that back in September, Bithumb was bringing in about $350 million in daily trade volume. This put them at the lower end of the top 10 exchanges in the world by trading volume.
By the 11th of November, however, Bithumb recorded over $4.4 Billion in trading volume, 12 times its usual volume. This positioned them as the second largest exchange in the world by daily trading volume.
CER claims that the reason Bithumb could make such progress in such a short time is due to them wash trading.
Wash trading refers to the act of an exchange simultaneously buying and selling from themselves at artificially drive up sales volumes.
“Judging from our multifaceted investigation on Bithumb charts we see the signs of trade volumes manipulations, specifically, wash trading,” CER marketing lead Gleb Myrko told Forbes. “Having calculated Price-Volume Correlation we came to the conclusion that the trade volume performance is not linked to price fluctuation on the exchange.”
One of such incidents was the volume of Bitcoin trading increasing more than 10 times. However, there were no external factors such as a price shift that would have warranted such increased trading.
Also, it was observed that in the first few minutes of the 11 AM hour, a huge surge in trading occurs on a daily basis. This accounts for 95 percent of trading.
Transaction size also saw a significant increase, going from an average of .21 to 5.88 BTC.
Coins such as BTC, LTC, ETC, XMR, ZEC, OMG, and BTG saw huge amounts of trade in a very short amount of time, usually minutes. WTC, in particular, showed some peculiar activity.
“WTC stands out from all the coins we observed, as it was only listed on the exchange on the last day of August and had the shortest pump period which started on October 28th and lasted till November 11th.”
Bithumb, on their part, have denied any manipulation of trading volumes.
Bithumb is doing nothing to inflate trading volume,” an unnamed company representative told Forbes. “Bithumb is not selling the 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.”