According to an analysis conducted by the decentralized cyber security company Hacken, through some marketing techniques and fictitious sales ( wash trading ), the exchange house BitForex has managed to manipulate its volume of transactions in CoinMarketCap to be located, in a very short time, at the top of the list.
Hacken's report, published on July 16 on the blog of Crypto Exchange Ranks (CER ), indicates that the purpose of the analysis was to determine the causes of the success achieved by BitForex – and other exchange houses such as FCoin and CoinEx – which, despite being newly created companies, entered the list of CoinMarketCap and outperform other platforms with more trajectory. As a result, they concluded that the techniques used by BitForex allowed to falsely increase their transaction volumes to quickly climb the ranking. In this way they can charge large amounts to the developers of the coins to include them among their exchange pairs.
The analysts took data from social networks and the relationship with the community, as well as the results of the volumes of transaction and the number of BitForex users, which were contrasted with other major exchange houses but located in lower positions in the list, such as Kraken or KuCoin.
The Hacken team stated that this company , based in Singapore, falsifies its volumes by means of false purchase and sale orders, because it does not have a broad, active and loyal community in social networks that justifies the levels of negotiation it has.
They assure that ] visitors to the site are mainly referred from CoinMarketCap due precisely to their position in the ranking, and that BitForex does not invest in the execution of the strategy. marketing and communication to build a community organically.
BitForex and CoinMarketCap respond
Not to mention Hacken's report, the BitForex company, through a press release published this July 19 and signed by Daniel Rufini, representative of the company, reported that its location in the top positions of CoinMarket Cap is due not only to its quality projects, but to the fact of having added several cryptocurrencies to its service offer, besides informing that is about to launch its own token (BF). He also announced the appointment of Henry Jiang as risk control advisor and reiterates that the success has to do with the ability of his team.
For its part, CoinMarketCap also published a statement on its blog this July 19 , in response "to the concerns about the volumes of the exchange houses and their classifications". On this, he affirms that he defends the transparency of the information that is provided on the site, and exposes three elements that influence the perception of the data: mining with transactions, low-cost models and the wash trade
He adds that mining with transactions is a model that allows exchange houses to make refunds to users with their own token, each time they perform operations. The low cost models consist in the collection of very low rates to encourage commercial activity; while commercial laundering uses market creation services and bots that commercialize cryptoactives and inflate exchange volumes.
CoinMarketCap ensures that is not able to control these elements ] and emphasizes that, although it is responsible for checking the data of the projects on its list, it can not monitor or censor others. Expresses that the lack of transparency in the data is a problem whose solution should be sought by all participants in the sector.
Some data from the report
The comparison between exchange houses began two months ago , noting that in that period the BitForex volume increased from several million to $ 208 million, to go from the top 70 to the top 7 in CoinMarketCap. Meanwhile, Kraken showed $ 75 million (15th place) and KuCoin $ 27,000,000 (45th place). These data were taken on July 15.
Likewise, with the use of monitoring tools, the website's monthly traffic was analyzed, observing a smaller number of unique users compared to Kraken and KuCoin. There was also a lower number of followers in social networks, a weak activity on Twitter and the use of bots and fake accounts in Telegram was deduced. Despite this, BitForex registers a higher volume of operations than the other two companies, the report states.
Regarding commercial volumes, manipulation of the market is suspected due to the differences registered when comparing the metric of the total volume of trade per user, for the BTC / USDT pair in several exchange houses. In the period studied this value in BitForex was higher than that of Huobi, Binance and OKex, despite being positioned at higher levels.
It should be noted that this type of manipulation practices are being investigated by the Department of Justice of the United States since last May, when he promised to put special emphasis on exchange activities and possible illicit activities in the cryptoactive market. In that regard, last June Ripple Labs was accused of using this marketing strategy and received a class action lawsuit.
Featured image from Elnur / stock.adobe.com