Report – Estimated $100mil Stolen in 2018 from Crypto Ecosystem

In their December 2018 Exchange Volumes Report, the Blockchain Transparency Institute analyzed trading volumes on top-25 BTC trading pairs, listing fees, and security on major crypto exchanges. Their conclusions generally demonstrated characteristics of an immature market that is still fairly vulnerable to wildly inflated trading volumes and frequent hacks. There were some silver linings as well.

In their analysis of the top-25 BTC pairs, they discovered 4 different bot strategies which are used by exchanges to inflate volume numbers. These strategies are intended to inflate low real-volume periods at different times of the day and night. The bots are also used to artificially pump a hyped coin or new listing.

Ultimately, “most of the top-25 BTC pairs’ actual volume is under 1% of their reported volume on CMC.” However, 3 of the top-25 were not enormously wash traded on Binance, Bitfinex, and Liquid.

The report states that, “Based on this data over 80% of the CMC top-25 BTC pairs volume is wash traded. These exchanges continue to use these strategies as a business model to steal money from aspiring token projects.”

The most egregious instances of wash trading by exchange included OKEx, which just moved onto the Exchange Advisory List, Huobi, HitBTC, and Bithumb. Bithumb is currently #1 on the exchange advisory list by claiming more than double the volume of the #2 exchange on the list.

Listing fees on exchanges range from expensive to exorbitant. Binance listing fees reportedly hit as high as $2.6mil depending on the project and its desired exposure. Those listing fees represent a tidy sum being removed from the crypto ecosystem. Presumably, exchanges are able to charge high listing fees based on the volume they are reporting on CMC which has been shown to be largely false.

“The average project spent over $50,000 in 2018 which adds up to an estimated $100,000,000 stolen in 2018 from the crypto ecosystem,” as stated by the Blockchain Transparency Institute.

Those averages, when considering that over 50 exchanges are wash trading 95% of their volumes, amounts to an impressive money-making scheme wherein exchanges could easily top $1mil/year in listing fees alone.

In regard to security, 2018 saw the most losses due to security breaches than any other year before and only appears to be getting worse, according to the report.

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