A shocking report published by CER, the crypto exchange rating service, has alleged widespread and substantial foul play at Bithumb, the world’s second largest cryptocurrency exchange.
The expose found that as much as 94% of the trading volumes on the South Korean cryptocurrency exchange had been faked, with the practice first dating back to the summer of this year.
Back in September, Bithumb was placed towards the bottom of the top 10 global exchanges list, with volumes of around $350 million a day. By November, that had risen to $4.4 billion, increasing by over 12 times in the space of several weeks.
According to the findings of the CER report, this inflation of activity was the result of a tactic known as ‘wash trading’—selling and buying cryptocurrency markets at the same time, in order to inflate overall activity on the exchange.
CER marketing lead Gleb Myrko said all the signs were there of significant manipulation of trading volumes at Bithumb. In an interview with Forbes contributor John Koetsier, Myrko explained: “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.”
In one case, the report details a 10x jump in daily volume for Bitcoin Core (BTC), with no underlying fundamental factors that would have had such a significant impact on price. This is all the more surprising in light of the depressed trading in BTC, with September trading in keeping with the broader descending trend.
In another instance, as much as 95% of a day’s trading volume was logged in the space of just a few minutes after 11 a.m. over a period of days, as well as irreconcilable trade volumes and price movements.
One coin, WTC, in particular was singled out as reflecting some of the most suspicious activity.
“WTC stands out from all the coins we observed, as it was only listed on the exchange on the last day of August and had the shortest pump period which started on October 28th and lasted till November 11th,” according to the CER report.
Bithumb has denied the allegations, telling Koetsier that the exchange “is not selling mining based coin,” but what it tries to do is “to get more customers by providing various promotions just like any other company in the world as a normal business.” In addition to the report, CER is planning to publish evidence, including 20 pages of charts and data, to back up its allegations.
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