Binance CEO: There Are ‘Definitely Questionable Volumes’ on Many Crypto Exchanges
Binance CEO Changpeng Zhao is sharing his views on recent reports that cryptocurrency exchanges use various tactics to inflate their trading volumes. Zhao thinks something’s fishy, and told Cointelegraph there are a number of ways exchanges can make it look like there’s more volume than there actually is.
“They are definitely questionable volumes if you look at a lot of the candlestick charts from many different exchanges when the price is moving very significantly…
There’s a practice, I can share with you, where some crypto exchanges report volume twice. We only do it once. Basically, we’ll leave 50 percent of volume other people report if we use the same standards that they do. When you buy and sell, when this is one trade, there’s a buy side and there’s a sell side. Basically, if I buy one Bitcoin from you, some of the exchange count this trading volume as two Bitcoin, because there’s one sell, one buy. We always report it as one. In a lot of ways, we actually report only 50 percent of the volume.”
Zhao also talks about wash trading, which is when a trader simultaneously sells and buys a coin to create fake activity in the market.
“If you look at the candlestick chart, when the price is moving very significantly, that’s a low volume. When the price is stable, this very high volume is wash trading and that’s wrong. That’s a very clear indication of wash trading. Many exchanges have put requirements on the listing on the coin project team that you have to guarantee a certain trading volume. What happens is that listing team will hire some guy, who they call a market maker, who will just generate tons of volume. And they basically create two accounts who just trade against each other. In this way the exchange is not doing, but the project team is. As part of the listing requirement, they ask the project team to guarantee the trading volume, which we do not do.”
As for the future of his own enterprise, Zhao says he’s focusing on the mechanics of creating Binance Chain, a decentralized cryptocurrency exchange that’s currently in development. The public blockchain will help Binance transition from “a company to a community”.
Binance is the largest cryptocurrency exchange in the world with $1.5 billion in trade volume, according to Coinmarketcap,
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