South Korean Crypto Exchange Bithumb accused of faking 94% trade volume
Bithumb, the South Korean cryptocurrency exchange has been accused of faking trade volume, to show a higher reported value, an allegation that the exchange denies, as reported by Forbes on December 19.
The accusation has been fronted by CER, a cryptocurrency exchange ratings and analytics service which has lambasted the Korean exchange of falsifying 94 percent of its trade volume since the beginning of the year.
“Bithumb is doing nothing to inflate trading volume,” said a representative of the company to Forbes. They added, “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.”
CER has accused Bithumb of “wash trading,” a form of market manipulation where large amounts of crypto are moved by the same entity back and forth to show an increase in trade volume without an actual ‘trade.’
According to CoinMarketCap, Bithumb’s daily trading volume in September was $350 million and by early-September, the daily trade volume jumped out by 1157 percent to $4.4 billion. At press time, the Korean exchange is the second largest exchange by reported volume, posing a figure of $1.66 billion.
Gleb Myrko, a CER marketing lead told Forbes, “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 conclusion that the trade volume performance is not linked to price fluctuation on the exchange.”
The average transaction size at the beginning of the summer was 0.21 BTC and then it ballooned to 5.88 BTC between October 15 – November 11, while the price of Bitcoin dropped significantly during the same period.
Other coins that also followed the same suspicious patter as Bitcoin were: Monero [XMR], Zcash [ZEC], Litecoin [LTC], Ethereum Classic [ETC], OmiseGo [OMG] and Bitcoin Gold [BTG].
“Bithumb has mastered a multi-factored approach to conceal its foul play,” said Myrko. The CER executive also gauged how the Korean exchange could pull off this maneuver, he stated, “the manipulations were fulfilled via matching opposite orders with the same price or by simply drawing transactions out of thin air, so-called ‘painting the tape.’”
Myrko concluded, “Such irresponsible activity makes crypto field less than unwelcoming for the investors and industries who saw blockchain as a new opportunity.”
CER is looking to publish data worth 20 pages, which included documentation, charts and images of alleged fraudulent behavior on the part of Bithumb. The Korean exchange has vehemently denied all the accusations purported against it.
Image via Shutterstock
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