A recent report by Blockchain Transparency reveals the shocking reality of most of the Cryptocurrency exchanges. 87% of all the trading volumes on the top 25 exchanges are Fake.
Coinmarketcap is not a reliable source of information to measure trading volumes on various exchanges. This is evident from the data presented in the report, out of the top 25 exchanges on Coinmarketcap a shocking 11 of them have over 99% of their volume faked, 12 of them including major exchanges like Huobi and OKEx are faking over 75% of the trading volumes.
(Wash Trading: When an investor buys and sells to himself to create the illusion of trading activity on exchanges. It is illegal in most jurisdictions)
Most of these exchanges are not properly regulated, some of them are even located in places like the Cayman Islands and Gibraltar where there are effectively no regulations.
Image Source: blockchaintransparency.orgBinance and Bitfinex Come out Clean
The only 2 exchanges out of the top 25 to come out clean are Malta based Binance and British Virgin Island-based Bitfinex. Although Bitfinex has been accused of pumping up the Bitcoin price in 2017 by printing Tether, their exchange data seems reliable.
Binance has proven itself over and over again with Changpeng Zhao leading the company. Recently the exchange vowed to donate all of the listing fees to charity and is also actively working on developing the ecosystem with its education initiatives and funds.
Major US exchanges like Coinbase and Kraken did not even make it to the top 25 list. Most of the US exchanges are majorly fiat on ramps and do not indulge in wash trading.Blockmanity’s Take
The Crypto industry is still nascent with unreliable data and many scattered and unreliable exchanges. As more regulations kick and more institutional players like Nasdaq, NYSE enter the market with their products we should be able to see better price discovery.