🔍🧐 Cryptocurrency exchange trading volume investigation 🧐🔎
Our team set out to determine whether volumes reported on cryptocurrency exchanges were genuine.
The data: docs.google.com/spreadsheets/d…
We then used Similar Web website viewership metrics to calculate the estimated 30 day traffic to each exchange's website. After doing this, we divided reported volume for each exchange by the # of monthly website visits to determine the reported volume per visit.
While website viewership metrics don't account for API or mobile app trading, they do provide a good basis of comparison across exchanges to identify suspicious reported volumes.
For example, while #Binance reported $750 traded per visit, DOBI reported a whopping $356,625
We then wanted to create a basis of comparison to calculate what we expected an authentic representation of exchanges' volumes would look like. To do this we took a weighted average of trading volumes across Binance, Coinbase Pro, Poloniex, Gemini, and Kraken.
We selected these exchanges because of large usage among institutions, reputation within the market, and because their web viewership appeared consistent with their reported trading volumes.
We found that these exchanges averaged $591 in trading volume per web visit.
Some notable outliers were BitMax, Lbank, BW, and ZBG which had extremely high reported volumes, but expected volumes which in some cases were less than 1% of what they reported.
When we divided the top 100 exchanges' expected by their reported volumes, we found that 59% of exchanges' reported volumes were over 10 times higher than what we would have expected had they similar volume per visit to Coinbase, Binance, Kraken and others.
In total we estimated that 87% of exchanges reported trading volume was potentially suspicious and that 75% of exchanges had some form of suspicious activity occurring on them.
There were limitations to this report including some of the aforementioned, but the point of the exercise was to show those exchanges that appear most suspicious and to start a greater conversation around wash trading, transaction mining, and liquidity.
We made all of the data available for free in a Google Sheet below.
We are actively adjusting pricing, volume and exchanges listed on The TIE to more accurately reflect what we believe to be non-suspicious activity. We appreciate community feedback