Possible Cryptocurrencies Flagged for Price Manipulation
There are a total of 1899 coins listed on top crypto market aggregation site Coinmarketcap. As an investor looking to 10x, 100x or maybe even 1000x which coins do you look at? For these kinds of ROIs many feel like they need to go further down the rankings and look at coins considered alts. Small cap alts are definitely prime targets for price manipulation and investors should take care in choosing where to put their hard earned money.
I am going to outline coins which I believe have a high chance of price manipulation. Without actual proof though I won’t label these coins as outright scams but personally I would not touch them myself. My aim here is to only highlight the coins which stand out according to my methodology. Make your own conclusions on if the coins are scams.
For my analysis I have looked at the top 500 coins as ranked by coinmarketcap.
In my framework for flagging suspect coins I looked at the below factors. I came up with a scoring system to rank each factor and then tallied up the results to come up with a list of high risk coins. Each factor has been assigned a weight from 4 to 1.
1. Coins which have connections to the exchange it is listed on (4 POINTS)
It can get expensive trading a coin because of the transaction fees. If you want to manipulate the price of a coin you could just wash trade whatever coin you want but it wouldn’t be in your best interest. The fees on most exchanges are about 0.1% so you would quite quickly dwindle your stack. However if a coin has links to the exchange it is traded on the fees will be nil. There is no penalty in trading huge volumes if you are the owner of the exchange!
Interesting Note: Binance Coin (BNB) would have most likely been flagged at the top of my list if I had conducted this analysis a few months ago. They used to be only listed on their own exchange but have since listed on multiple exchanges. Special shout out to theBinance team for being proactive in this area.
2. Coins with a relatively high trading volume (3 POINTS)
Higher trading volume coins give the impression of liquidity. Coins traded more frequently signal to investors that there is a healthy demand for the coin and that it is more widely known. The risk to an investor is lower if the coin has higher liquidity. You don’t want to be left holding a bag if bad news comes out. In these cases you need liquidity to find buyers and sellers for the coin.
3. Coins which trade on 1 or 2 exchanges (2 POINTS if on 1 Exchange)
A coin which doesn’t trade on many exchanges is easier to manipulate because of the lack of liquidity in the market for the coin. A large trade order will cause a big movement on the price. If there are no other exchanges to average out the price then coinmarketcap will just report on the one price from that exchange. These types of coins are most likely to leave you holding a bag after pump and dumps.
From my list of 500 there were a total of 67 coins trading on 1 or 2 Exchanges. I gave 2 points to each coin trading on only 1 exchange.
4. Coins with high marketcap (1 POINT)
A top 20 coin naturally gets more media attention than a lower ranked coin. Anything that is in the front page of coinmarketcap falls in the top 100. These coins are considered the more established or up and coming projects. Coins ranked much lower wouldn’t catch the attention of new investors anyways so the likelihood of being taken advantage off is lower.
I gave out 1 point if the coin made the top 100.
Findings
From a random day this week I took a snapshot of the top 500 coins ranked by market cap.
The average trading volume for these 500 coins that day was $25,693,573.96.
I decided to tally and group coins into tiers according to their points.
Tier 1 — Highest Chance for Price Manipulation
These 2 lucky coins scored 7 points and made it into the top tier spots for highest chance of price manipulation.
- Bibox-Token (BIX)— This token has a staggering trading volume of $60 Million which is about the same volume that Cardano and Stellar does. Are you kidding me? How can this be legit? Who has even heard of Bibox? This is also the only coin on my list that has above average trading volume. Perfect example of wash trading.
- Kucoin Shares (KCS)- Have to admit I was bit surprised Kucoin made the list. The Kucoin exchange is well known and used widely. Still it’s a coin that is exclusively traded on their own platform. They really should take a page from Binance and get their coin listed on more exchanges.
Tier 2 — Medium Risk Coins
Next up I identified 3 coins which also stood out.
- LoyalCoin (LYL)- Trading volume just shy of $1 Million but not listed on any reputable exchange.
- bitUSD (BitUSD)- Linked to an exchange that it seems to be connected with. Meaning there is a possibility of wash trading with no fees.
- Aurora(AOA) — Worth noting that this coin makes the Top 100 front page rankings in coinmarketcap.
The Rest -Honourable Or Should I Say Dishonourable Mentions
The next 28 coins also scored on my framework methodology.
- BHPCash(BHPC)
- OneRoot-Network(RNT)
- Local-Coin-Swap(LCS)
- ugChain(UGC)
- Triggers(TRIG)
- PRIZM(PZM)
- Linkey(LKY)
- BridgeCoin(BCO)
- Nectar(NEC)
- BOScoin(BOS)
- dynamic-trading-rights(DTR)
- global-currency-reserve(GCR)
- FairCoin(FAIR)
- Soarcoin(SOAR)
- Scorum-Coins(SCR)
- HempCoin(THC)
- Aurora-DAO(AURA)
- FNKOS(FNKOS)
- ARBITRAGE(ARB)
- Bismuth(BIS)
- Mooncoin(MOON)
- Boolberry(BBR)
- OptiToken(OPTI)
- BrahmaOS(BRM)
- Etheroll(DICE) — This has been around for awhile and actually has a working product. Sad to see it hasn’t been picked up and listed on other exchanges.
- iocoin(IOC)
- moac(MOAC)
- Mixin(XIN)
Final Thoughts
The model I have only relies on a handful of factors but the accuracy of it can be further built out by looking at many other factors. Things like online communities can be included in the study. The twitter and reddit followers of the coin. Does it make sense that a coin that is hardly mentioned online has more followers than coins which have released actual products? These can be easily manipulated. Other things could include github activity of the teams.
The cryptocurrency industry is still young and full of cowboys in an unregulated market. If we want the industry to flourish we need to come together and call out the bad actors. The SEC has already said one of the reasons for the Bitcoin ETF rejection was because of market manipulation of prices. This is a real thing that is definitely happening.
If I get more interest and feedback from the community I would spend more time on this. Let me know.
