16 Feb 2025

light mode

Washtrading Rife on Crypto Exchanges, Binance Included

Washtrading Rife on Crypto Exchanges, Binance Included

A new report claims that in 2019 wash trading was rife on crypto exchanges, the worst of the worst identified

A new report sheds light on crypto exchanges’ malpractices.

Published by the National Bureau of Economic Research (NBER), it suggests that three out of four transactions in unregulated exchanges were fake. The practice is dubbed wash trading, a form of market manipulation in which an investor simultaneously sells and buys the same financial instruments to create misleading, artificial activity in the marketplace.

The authors of the paper used statistical and behavioral patterns to analyze the legitimacy of transactions, scrutinizing 29 unregulated exchanges between July 9th and Nov. 3rd, 2019. In particular, they analyzed data from TokenInsight, which provides ratings and industry reports as an independent third party. The focus was on four cryptocurrencies: BTC, Ethereum, Ripple, and Litecoin.

“Each transaction is fetched through the exchange’s official API (Application Programming Interface) and contains the exchange information, unique transaction ID, timestamp, price, amount of cryptocurrency traded, and trade pair symbol,” the authors clarify. 

The exchanges under scrutiny included regulated exchanges such as Bitstamp, Coinbase, Gemini; unregulated Tier-1 Binance, Bittrex, Bitfinex, HitBTC, Huobi, KuCoin, Liquid, Okex, Poloniex; and unregulated Tier-2 like Bgogo, Biki, Bitz, Coinbene, DragonEX, Lbank, MEXC, Fcoin, Exmo, Coinmex, Bibox, Bitmart, Bitmax, Coinegg, Digifinex, Gateio. 

Following an extensive analysis, the authors concluded that at some exchanges, the wash trading volume goes as high as 80% of the total trading volume due to short-term incentives since they impact the rankings of the exchanges on data and statistics websites like CoinMarketCap. 

“We consistently find anomalous trading patterns only on unregulated exchanges, with Tier-1 exchanges failing more than 20% of the tests and Tier-2 exchanges failing more than 60%. The findings remain robust in joint hypothesis tests,” the report adds. “These estimates translate into wash trading of over 4.5 trillion USD in spot markets and over 1.5 Trillion USD in derivatives markets in the first quarter of 2020 alone.”

In conclusion, the authors write that the average wash trading stands at 53.4% of trading on unregulated Tier-1 exchanges and 81.8% on Tier-2 exchanges.

The authors do not specify whether they analyzed wash trading on exchanges after 2019.

Previously, The Coinomist explained why the crypto is down despite good news. 

The content on The Coinomist is for informational purposes only and should not be interpreted as financial advice. While we strive to provide accurate and up-to-date information, we do not guarantee the accuracy, completeness, or reliability of any content. Neither we accept liability for any errors or omissions in the information provided or for any financial losses incurred as a result of relying on this information. Actions based on this content are at your own risk. Always do your own research and consult a professional. See our Terms, Privacy Policy, and Disclaimers for more details.

Articles by this author
AI Is Making Crypto Scams Smarter—Insights from Chainalysis 2024

AI Is Making Crypto Scams Smarter—Insights from Chainalysis 2024

The 2024 Chainalysis report confirms that AI-driven fraud is on the rise, with crypto scammers cashing in at least $9.9 billion through advanced deception tactics.

The Coinomist
North Korean Hackers Infiltrate GitHub & NPM to Steal Crypto

North Korean Hackers Infiltrate GitHub & NPM to Steal Crypto

Lazarus Group, a North Korean hacking unit responsible for numerous cyber attacks, has launched a new campaign targeting software developers and crypto wallets.

Anahit Avetisyan
Solana Outpaces Rivals as App Revenues Surge in Crypto Revival

Solana Outpaces Rivals as App Revenues Surge in Crypto Revival

Messari reports that Solana-based apps saw an unbelievable 213% revenue spike, making Solana the top blockchain for app-generated earnings.

Anton Kryshtal
HashFlare Founders Admit to $575M Crypto Fraud Scheme

HashFlare Founders Admit to $575M Crypto Fraud Scheme

A long-anticipated court hearing in the U.S. has concluded with HashFlare co-founders Sergei Potapenko and Ivan Turogin admitting to charges of wire fraud.

The Coinomist
Weekly Analysis of BTC, ETH, and the Stock Market (Feb 10, 2025)

Weekly Analysis of BTC, ETH, and the Stock Market (Feb 10, 2025)

An overview of BTC, ETH, XAUT, and S&P500 charts, and the current cryptocurrency market dynamics.

Artem Khomenko
Weekly Analysis of BTC, ETH, and the Stock Market (Feb 3, 2025)

Weekly Analysis of BTC, ETH, and the Stock Market (Feb 3, 2025)

An overview of BTC, ETH, XAUT, and S&P500 charts, and the current cryptocurrency market dynamics.

Artem Khomenko
Weekly Analysis of BTC, ETH, and the Stock Market (Jan 27, 2025)

Weekly Analysis of BTC, ETH, and the Stock Market (Jan 27, 2025)

An overview of BTC, ETH, XAUT, and S&P500 charts, and the current cryptocurrency market dynamics.

Artem Khomenko
How to Bump a Transaction in the Bitcoin Network

How to Bump a Transaction in the Bitcoin Network

Sometimes, Bitcoin transactions can get “stuck,” especially if a low fee was set. In such cases, you might wonder: Why is my Bitcoin transaction stuck?

bitOn
Inside Cryptocurrency Farms: How Digital Coins Are Mined

Inside Cryptocurrency Farms: How Digital Coins Are Mined

Cryptocurrency farms and mining have evolved significantly since Bitcoin launched in 2009. To understand their growth, it helps to look at the broader history of resource extraction.

The Coinomist
From Bulls to Ballers — Why Celebrities Are Flocking to Crypto

From Bulls to Ballers — Why Celebrities Are Flocking to Crypto

Trump’s meme coin isn’t an outlier—it’s part of a broader trend. Back in 2021, celebrities were minting NFTs, and by 2024, they had moved on to personal token launches. The connection between fame and crypto has been growing for years, even if many failed to see it.

Vlad Vovk
Which Macroeconomic Factors Make Crypto Rise or Fall? 

Which Macroeconomic Factors Make Crypto Rise or Fall? 

It happens when you check the market and crypto prices are up or down for no obvious reason. Then you do some research and find out that there are actually reasons outside the crypto space.

Anahit Avetisyan
How Blockchain Helps Combat Disinformation

How Blockchain Helps Combat Disinformation

Fake news has become a global issue, shaping public opinion, fueling social tensions, and even influencing political decisions. With the rise of social media, the spread of misinformation has accelerated, making it increasingly difficult to regulate. However, blockchain technology offers a promising solution in the fight against fake news.

Daryna Nesterenko
Trading Psychology: How to Avoid Falling Victim to Your Own Biases

Trading Psychology: How to Avoid Falling Victim to Your Own Biases

The most successful traders aren’t always the smartest. More often, those who excel are the ones who understand psychological traps, manage their emotions, and maintain rationality under pressure.

Vlad Vovk
SBF’s Prosecutor Quits – What It Means for Crypto Crime

SBF’s Prosecutor Quits – What It Means for Crypto Crime

Danielle Sassoon, Acting U.S. Attorney for the Southern District of New York, has resigned, making headlines this week. And you’ve definitely heard of one of her biggest “client” names.

Anahit Avetisyan
Trump’s Crypto Summits: Pragmatic Move or Regulatory Mess?

Trump’s Crypto Summits: Pragmatic Move or Regulatory Mess?

What’s the best way to figure out how the crypto industry needs to be regulated in the U.S.? Donald Trump is considering different options.

Anahit Avetisyan
MORE
«Mass Adoption Isn’t About Tech – It’s About Perception». Bitmedia Founder Matvii Diadkov – About RWA, Web3, And Marketing

«Mass Adoption Isn’t About Tech – It’s About Perception». Bitmedia Founder Matvii Diadkov – About RWA, Web3, And Marketing

Matvii Diadkov, founder of Bitmedia, shared with us in an exclusive interview his expert insights on Web3 adoption, impact of GameFi and community-centering tendencies in the market.

The Coinomist
“Satoshi is CIA”: Swedish crypto bro opens up about his Bitcoin journey

“Satoshi is CIA”: Swedish crypto bro opens up about his Bitcoin journey

The first crypto craze took place almost a decade ago. Overnight, many people found out about Bitcoin and its underlying technology, blockchain.

Lesia Dubenko
MORE