An industry exposé

Uncovering the truth behind crypto-exchange volume reporting

By: David Hannigan

One topic that has recently received a plethora of attention across the crypto markets, centres around exchanges reporting fake trading volumes. We at wanted to take the opportunity to address this issue directly with our community. In the following paper we will explain exactly what we do and why, and alert our community to some tell-tale signs of inflated statistics amongst our competitors both big and small.

The crypto market, while still in its infancy, is an incredibly competitive venue. Just looking at a certain well-known crypto website, which has become the go-to source for crypto statistics, there are currently 2,136 coins listed as well as 246 exchanges. 246 exchanges all competing for your business and, more importantly, your commissions. What better way to do that than by saying “We are the biggest, we are the best? We are top 10. We are top 20. We do $X volume a day. That’s Y% more than other exchanges.”

Click on the exchange name on the list and you are taken immediately to a list of coins they offer and a link to their website, just begging you to click. A marketing dream. A dream that is, until you dig a little deeper. As Mark Twain said in his autobiography, “There are lies, damned lies and statistics”.

The approach

If you were to navigate to the aforementioned well-known website for all things crypto, you will find ranked 139 by reported volume. Is this where we aspire to be? No, it is not. But for now, against all other reported volumes (yes, the exchanges give their own volume numbers), that’s where we are. However, sort by another column and will indeed make the top 20. Sort the data by the ‘launched’ column and you will see that we are one of the youngest exchanges, having just passed our 9-month birthday. And like many babies we have had our share of ‘teething’ problems and even the occasional tantrum.

However, as we have taken our first tentative steps into the crypto world, we have looked for a steadying hand or two. One of those has indeed been the provision of prices into our exchange using market makers. There are two principal reasons for this. One has been to create a market with some depth of pricing for traders to utilize. The second has been for a certain tier of pricing to allow for charts to be created and constantly updated with price data. This does involve the pricing bots dealing with each other on small amounts, but, and this is a very important “but”, each of those prices is actually available and executable by our clients. The sole purpose of this exercise is chart creation. If it wasn’t, we would not be 139th by volume.

We have evaluated our current approach and have identified a need for better market making capabilities, tighter pricing for the major coins as well as a greater depth of liquidity at the top of the book for the liquid coins. As we begin Q2 this goal is being prioritized. We believe that this will lead to an increase in organic volume, eventually reducing the need for automated bots to trade just to produce legible charts. We have a responsibility to our community to be transparent in our approach and a responsibility to ourselves to move up the rankings in the right way. 139th is not acceptable. Manipulating volume figures to move higher is even less acceptable.

The rest — what is fake and what is not

At, we have no desire to point fingers at other exchanges by name. There are many that inflate their volume data to create a false impression of their success and their abilities. They know who they are. There is a lot of recently written material that goes into deep analysis on the issue and does examine some of the largest exchanges directly. One of our own community members has in fact produced their own analysis in the form of a YouTube video and the evidence is clear. Our only goal here is to point out some red flags that our community should be aware of when looking at other exchanges.

Let us be clear about a couple of points first. The vast majority of crypto exchanges have market makers providing prices and liquidity for clients. Just like There is nothing wrong with that. The floor of the NYSE, for example, is no different. Each company listed will have designated market makers to provide liquidity to the millions of customers who deal each day.

On occasion, these market makers will deal with each other when they have opposing views or positions. It’s a normal practice and provides for an orderly market. The same can happen on a crypto exchange. However, having the same market maker deal with themselves to create a false volume is most certainly not permissible. It is known as wash trading and is rampant in our industry. So how do we identify it? Here we will look at three red flags.

Daily volume versus daily site visits

One very telling piece of analysis is to take the average daily volume for each exchange and divide it by the number of average daily hits on its website. This way you can see what the average volume traded is per visit to the website. A recent report by Bitwise Asset Management highlighted this very issue. Rather than make you read the entire report, here is a spreadsheet which highlights their findings.

Obviously different exchanges have different customer bases and we would naturally assume that the larger, more established, ones will have a broader client base with some ‘whales’ in their midst. Therefore their volume would be higher. But when you do the simple math and see the average volume traded per website visit at one established exchange is $500-$1,000 and yet at a smaller lesser known venue, that number jumps to $100,000 or $150,000 per visit, the alarm bells start ringing. Loudly! Imagine having 5,000 daily website visits and every single one of those generating $150,000 of trade volume. That would be $750 million of daily volume. That volume is more than the entire market capitalization of the 17th ranked coin! So how do they achieve those numbers? Well, they either have the most amazing sales and marketing teams on the planet, or they are engaging in wash trading and fake volume.

To highlight the extent that daily trading volumes are over-reported, we suggest you take a look at the work done by Messari. Here is the link.

Their research attempts to show the multiple by which volumes for each coin are overstated. Play around with the filters, but close attention to “Real 10 24hr Vol”, “Reported 24h Vol” and “Volume Overstatement Multiple” — the results speak for themselves.

Volume charts

As with the previous analysis of daily volumes versus daily site visits, looking at volume charts requires a somewhat intuitive approach. We all know that the crypto markets can go through extended periods of tight range trading. The lack of volatility would naturally imply a lack of volume being traded.

However, once there is a big move that would signal an imbalance between supply and demand, there should be a natural increase in volume. Below is a volume graph which shows the ebb and flow of volume with the various price movements over the course of several days.

This is an hourly BTCUSD chart covering March 26th — April 3rd, 2019. As you can see the price action over the first seven days is fairly steady with one brief dip to $3,855, followed by a slow rise towards $4,200. Along the bottom you can see the various volumes by hour, which are relatively low, with occasional increases as volatility increases. Then, on April 2nd, BTC has a rally of almost 20% at its extreme and we can see an explosive rise in volume to match. The volume levels then ease off, as the price stabilizes, but remain at elevated levels compared to the prior week. This is exactly what a volume chart should look like with real trades being executed. Below is a chart of what it should NOT look like.

Here, we can see a similar time period covered, but the volumes remain almost identical across the range. This is a very strong indicator of wash trading and fake volume.

Ease of filling larger orders

This one might be tougher for the average retail trader to spot given the average trade size tends to be less than $10,000. However, some of you whales out there might on occasion want to make a larger volume order, say $100,000 or greater.

At current market prices, $100,000 is the equivalent of approximately 20 BTC. Transacting 20 BTC on an exchange that claims to have daily volumes of $750 million should be a very painless process and there should be very little slippage from the top of the book price, at most 0.1–0.2%. However, if volumes are fake, there will be a lot more slippage since the pricing will just be from market makers, who will naturally adjust prices as you show interest with no other genuine interest showing.

Spreads are another thing to examine. Any top exchange by volume should, by definition, have very competitive and aggressive spreads. How can any exchange win business with uncompetitive spreads? A quick look at any exchange’s pricing should be very revealing, if an exchange has huge volume but also huge spreads, this is a red flag. At, we are committed to getting our community the best pricing available and are currently working diligently to do just that. For any trader, big or small, being able to transact your chosen amount at a fair price is the very essence of what a strong exchange should provide. Those that claim to be one thing but are in reality something very different are easy to expose when you know what to look for.

Our promise to the community

The crypto market is anything but mature. With that comes a constant battle for market share as ultimately it will be a case of survival of the fittest. Anyone involved in the crypto space over the past couple of years will have read many headlines about bad actors and scam projects. And being a market that is still largely unregulated, it is not surprising that there are plenty that will try their luck for a quick dollar.

We are committed to having an exchange that serves the needs of our community, while being adaptable and flexible to an ever changing environment all while being honest and transparent in what we do. We won’t always get it right, but we will listen to our community and execute our business plan in a professional manner. We will also call out others that choose not to, that would rather fake their achievements in the vain hope of duping unsuspecting clients. Fake volumes are nothing more than a mirage, an attempt to cover up failure.

We believe it is important to educate our community on important topics, so we hope you find this article informative, giving you a clearer picture of the current market, our approach, and to help you avoid some of the pitfalls at other exchanges.

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