The Story between CoinMarketCap, Bitforex and Coin Exchange Ranks
Reports on Fake Volume Used to Incentivize Exchanges
Bitforex, the smalltime cryptocurrency exchange that barely scraped onto the top 100 by trading volume is under the spotlight for supposedly using fake trades on a massive level. Crypto Exchange Ranks, who pulls from open sourced data exchange APIs, released a publication reporting that Bitforex is making fake transactions to create the illusion of volume and CMC (Coin Market Cap) of being a partner in the scam.
Bitforex, Coinmarketcap and Fake Volume
Defined as buying and selling orders for cryptocurrency to create false impressions of demand is exactly what fake trading volume is. The problem is becoming an epidemic in the cryptocurrency world. As long as anyone has been around, there have been shady exchanges, using fake trading to hide low numbers behind the guise of large volumes of trade. Some of these exchanges are guilty of wash trading or inflation volume.
It’s the same as buying a box of family size crackers only to open it and see it’s content is half full. False volume may seem relatively harmless at first glance, but it has serious ramifications for anyone trading.
Cooking the books as it’s often called, false trading tempts unsuspecting traders to sign up for a shady exchange, dangerous, with much less liquidity than appears. An exchange that participates in the scam of fake trading to increase volume has little inhibitions on performing more sinister crimes against its user database behind the curtains. Until now, Bitforex wasn’t overly popular to the world as an exchange, hanging around 70th place in global trade volume. Now it stands as the twelfth highest in the world, according to recent data numbers. CoinMarketCap, with 24-hours volume of $227 million.
Crypto Exchange Ratings Point Out Bitforex
A recently posted blog, on Crypto Exchange Ranks spells out the case of Bitforex’s fake volume trading. The numbers are not small time, in just a few weeks, the volume has increased over a 100x, now standing at more than 10x of established exchanges like Kraken and Kucoin, with a mere 2,000 Twitter followers, the number is hard to believe. The Singapore based exchange does have more than 65,000 Telegram followers as well, but a lot of it is likely to be bots and airdrop tokeners.
Bitforex claims in its Twitter bio to be licensed in the EU, however, there is no real basis for this. The website claims to be licensed in the Seychelles and Phillipines. The website makes bold statements, like having 1.8 million users, bringing in 15,000 new users every day, and to have amassed $1.5 billion of trade volume, making it as high as a number five on Coinmarketcap’s exchanges.
Who is Bitforex Anyway?
The blog Crypto Exchange Ranks isn’t falling for the false claims of Bitforex, writing instead that they can see the number of unique users of Bitforex is only about 29.9K. Kucoin has about 889K users. Kraken has 666K users. The unique user rate on Kucoin is 30x to that of Bitforex with Kraken’s being 23x to Bitforex, concluding using SimilarWeb, the exchange gets the bulk of new traffic via referrals.
The platform therefore gains attention immediately. The reason to create authentic traffic in an organic way is much more expensive than creating fake trade volumes.
While CoinMarketCap isn’t likely to be assisting Bitforex, by releasing the trade volume of the website without researching it, they are still contributing to the deceiving company. A comparison to show the point is that other sites have been unwilling to report the sort of inflated figures produced by websites like Bitforex, even if the API data might show high volumes of traffic. Bitforex doesn’t inspire confidence. But until CoinMarketCap makes a stand against fake traffic, exchanges will be willing to cheat the system and lure out poor traders who are eager to purchase the next big token.
Is Bitforex Trading producing high volumes like they say? Let us know in the comments below.
Now, CoinMarketCap has responded in its Transparency and Clarity blog post which you can read in review here: