Blockchain Transparency Institute’s Market Surveillance Report Finds Wash Trading On Binance


One of the world’s leading crypto exchange, Binance, apparently has wash trading occurring on it. This is according to the latest edition of Market Surveillance Report by the Blockchain Transparency Institute.

A wash trade is 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. First, an investor will place a sell order, then place a buy order to buy from himself, or vice versa. This may be done for a number of reasons, mainly to artificially increase trading volume, giving the impression that the instrument is more in demand than it actually is.

When there is more liquidity, there appears to be a better chance you can move in and out of positions quickly and so make money when you spot an opportunity. Exchanges are eager to increase their trading volume. Higher volume results in more liquidity, which attracts more traders and ultimately results in higher revenue. Although many in the industry have pointed out the flaws in these metrics, there is evidence that some exchanges are structured to encourage wash trading.

The report by BTI shows that even the well-reputed exchanges are indulgent in such activities. Binance is one such example. Although, they took the time to mention that exchanges like Upbit, Bittrex, Poloniex, Liquid, Coinbase, Kraken, Gate, Bitso, and Lykke are at least 90% free of wash trading. They even go on to say that Kraken is the cleanest of them all with over 99% of reported volumes real.

“17 of the CMC Top 25 exchanges to be over 99%+ fake with many greater than 99.5% fake volumes, including 35 of the top 50 adjusted volume rankings… Over 60% of all exchanges ranked on popular data sites have little to no volume and were found to be over 96% fake each.”

The report ranks the exchanges by volumes and shows the percentage of real volume, as can be seen in the picture below.

wash trading BTI

However, this report is in stark contrast with that of Bitwise released in March 2019. Binance was named as one of only ten exchanges that has “actual” Bitcoin trading volume.

If you want to read more about the crypto wash trading, you can read about it on our in-depth analysis on the topic.

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