Thread by @falconxnetwork

1/ 🔥 We are fired up by our friend's @BitwiseInvest presentation to the SEC: sec.gov/comments/sr-ny…

We hope our advice was helpful when putting it together!

What are the implications for asset managers and traders?👇

2/ Wash trading. Spoofing. Slippage.

Institutional traders face these challenges every day across exchanges. So which are the good ones?

3/ @BitwiseInvest has identified 10 exchanges - Binance, Bitfinex, Kraken, Bitstamp, Coinbase, bitFlyer, Gemini, itBit, Bittrex, and Poloniex - as the "good" exchanges with minimal printed and spoof volume.

4/ While the @BitwiseInvest report finds great exchanges and exposes the printed volume issues - it doesn’t necessarily find all the most liquid venues, which is a key question for crypto traders/investors.

5/ It doesn’t explicitly filter out printed volume to find real trades across venues. As a result, the ranking hides some very liquid exchanges that also print volume as a form of advertising.

FalconX's real-time wash trade detection identifies @HuobiGlobal as a prime example..

6/ Now that this report is out in the wild, a chicken an egg game begins.. We have observed that past research on printed volumes have changed the behavior of many volume printers. For example...

7/...Going forward bad actors can:

- Have a random variable that chooses taker side of the next wash trade (sell vs buy taker)

- Printers can sample trade sizes from a distribution of recent trades from legitimate exchanges

8/ We believe digital asset traders need fault-tolerant best execution systems that can intelligently identify and filter wash, spoof and phantom liquidity from real liquidity in real-time.

So that's what we've built.

Killer stuff @HHorsley @Matt_Hougan and Hong Kim!