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New study finds Massive discrepancies between crypto-exchanges

Mar 13, 2018 Posted /  2570 Views

New study finds Massive discrepancies between crypto-exchanges

There are many types of research going on in the field of cryptocurrencies, and several of them are studying about the scams and frauds taking place. There was yet another research made on the same subject, and on March 10 a cryptocurrency trader and researcher published the findings on how he believes that $3 billion worth of cryptocurrency trade volumes, primarily from a couple of exchanges are connected with each other. The author of the study, Sylvain Ribes, asserts that the exchange called OKcoin has been faking up to 93 percent of its trade volumes.

Huge Inconsistencies

The report published by Ribes reveals many interesting facts about trade volumes that must point the question on exchanges. The stemming of trade volumes by exchanges such as Okcoin (Okex) and Huobi leads to factual fabricating and present indecent images to investors for their benefit. Ribes said that he calculated the data from order books of all major exchanges that he could come across and measured "how badly market selling $50k USD worth of each cryptocurrency would crash the price.”

Moreover, Ribes elaborated about the term called "slippage," which he says could be described as “the percentage change between the observed mid-spread price and the lowest price I had to consent to sell the asset.” All the time Ribes report researched about several currency volumes coming from exchanges like GDAX, Bitfinex, Kraken, Binance. Ribes states more he studied, more he found huge discrepancies between trading platforms.

“I found ridiculously massive discrepancies between exchanges. Not the kind that can be easily hand-waved away (“oh well, their users must behave differently”), but the kind that can only be explained by some figures being overstated as much as 95%,” illustrates Ribes’ in his study.

Okex Volume Is Fake

In his, study Ribes reveals that the trading volume depicted by Okex exchange should raise the red flag because the cryptocurrency markets are unregulated artificial volumes and wash trading should be expected. Ribes’ slippage and volume chart display the pairs with a regular volume of $100K over four exchanges over 24 hours.   

“Many pairs, albeit boasting up to $5 million volumes, would cost you more than 10% in slippage, should you want to liquidate a mere $50k in assets — Those pairs included, at the time of the data parsing (06/03/18): NEO/BTC, IOTA/USD, QTUM/USD — Hardly illiquid or low-profile assets,” Ribes asserts as he went on to say

"Although those numbers alone prove to me without the shadow of a doubt that a suffocating majority of the Okex volume is fake, I had not witnessed first-hand how they implemented it — I thus logged into their platform and had a look at some pairs trading history. And indeed, they fake their volume in a laughingly obvious and artificial way."

Ribes states that Okex volumes are substantially inconsistent in comparison to an exchange like Poloniex that is “generally quite liquid across all pairs.” Moreover, the study hints that the trading platform Huobi Pro has approximately 81.8 percent of “made-up volume.” He elaborates that even though there surface a more organic volumes taking place “there still exists a strong background of constant low-key wash trading.”

Zhao Changpeng, the CEO of Binance commented after the report was published that Ribes study was a “good in-depth analysis.”

"We like liquidity, but we don’t like “flash” liquidity, which is used by many HFT “market makers.”

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