The CEO of the exchange Changpeng Zhao revealed that they declare half of Bitcoin’s volumes
1 It's the standard way in traditional exchanges
2 We like to “hide” our volume so that we are not seen as that much bigger. But we choose this from our day 1, when we were very small.
Do we do wash trading? No.
— CZ Binance 🔶🔶🔶 (@cz_binance) June 8, 2020
The tweet comes a few days after CoinMarketCap has once again changed the algorithm for the ranking of exchanges, keeping Binance in the lead again.
The story began several months ago when Binance announced that they had bought the CoinMarketCap platform for about $400 million. Since then, suspicion of interference by the exchange began to circulate. The fear of the users is that CMC would manipulate the data to lead the exchange into first place and present it as the best exchange on the market. CZ had responded to these concerns with reassurances.
In addition, as if that were not enough, important changes were made during this period, resulting in the new algorithm for determining the ranking of exchanges based on several factors. Once again Binance was the winner, not giving up the first position.
At this point CZ, fed up with the constant harassment, revealed a secret about the Binance platform, which is that it only reports 1 BTC as volume compared to the other exchanges, combining both selling and buying volumes, which means that instead of reporting 2 BTC, it reports half of them.
The CEO explains that this choice was made for two reasons:
- Because that’s how traditional exchanges operate;
- To hide the real trading volume of the platform and not appear too big, a strategy adopted by the exchange from day 1.
With these newly disclosed details, CZ has rejected any accusations of wash trading that Binance may have made in order to be in the lead. In fact, it is not uncommon to use bots to falsify trading volumes by setting sales and purchases on some assets to pump up their value or to increase their volumes, appearing more solid and with better liquidity.
These revelations lead to some incredible considerations, namely, that despite reducing trading volumes by half, Binance manages to keep up with most exchanges. It is legitimate to think that only half of the trading volumes are reported at this point, whereas when comparing for average liquidity then we see Huobi in the lead followed by Bitfinex, HitBTC and then Binance.
Binance, other exchanges and trading volumes: a manipulated system?
Another fact that is evident is that if most exchanges double their volumes, it is possible to assume that the whole system is “manipulated” or simply untrue. If on one hand there is Binance that intentionally “hides” its volumes, on the other hand, there are those who “invent” their volumes.
Indeed, comparing the data coming from CoinMarketCap with those of CoinGecko, there are different results, partly because different parameters are considered, but which given the facts could be closer to reality: at least three times less.
This is a negative and unsustainable situation, especially for users who are continuously and constantly deceived by centralized exchanges that, apparently, have as a priority their own volumes and not the end-user.
Decentralized exchanges (DEX) can completely eliminate the risk of running into “ghost” volumes.