A cryptocurrency trader has published a study showing his conviction that a massive amount of crypto trading volume on OKex is concocted.
Sylvain Ribes, the author of the study, brings to light some interesting information gathered from popular exchange platforms that could be falsifying their crypto trading volumes. He explains that his initial intention was not to look for fake crypto trading volume but to “gather data about cryptoassets liquidity.”
In order to do this, he needed data from a number of major exchanges so as to assess “how badly market selling $50k USD worth of each cryptocurrency would crush the price”, a figure he refers to as “slippage.”
He expected this value to be a “decreasing function of volume” with differences between various currency pairs. His research proved this to be true but revealed interesting insight.
Unusual Discrepancies between Exchanges
“Where I had expected mild difference between currencies, I found ridiculously massive discrepancies between exchanges. Not the kind that can be easily hand-waved away (“oh well, their users must behave differently”), but the kind that can only be explained by some figures being overstated as much as 95%.”
“Leading the pack is OKex, currently ranked #1 exchange by volume with $1.7b total volume on both Coinmarketcap and LiveCoinWatch websites.”
This is what according to Ribes raised the red flag, causing him to look deeper into available data to confirm his fears that most of the crypto trading volume on OKex is falsified.
His charts select pairs with a daily trading volume that exceeds 100k on four exchange platforms over a period of 24 hours. These were OKex, Kraken, Bitfinex and GDAX.
He explains that in an unregulated market such as the crypto industry, some level of artificial volume and wash trading is hardly a surprise. But the magnitude of it is what he had not anticipated.
This chart shows data on three exchanges is more or less consistent, but on OKex, shown in red, all the pairs indicate a significantly higher slippage than the rest. This is what convinces him that the volumes on OKex are doctored.
The Falsification Illustrated
He goes on to explain that even though these numbers alone were sufficient proof to him that most of the trading volume on OKex is concocted, he wanted to see firsthand how the falsification took place.
“I thus logged into their platform and had a look at some pairs trading history. And indeed, they fake their volume in a laughingly obvious and artificial way.”
He then contrasts the unusual consistency on the OKex charts against one taken from Poloniex exchange.
The final data set from Ribes’ study shows an overall discrepancy in the environs of 93% on the OKex platform. This is not the first time that the OKex platform has been accused of faking trading volume.
According to the study, data from Huobi also shows 81.8% of concocted volume. But Ribes explains that even though “the volume appears much, much more organic than OKex’s, there still exists a strong background of constant low-key wash trading.”
He places the responsibility on the hands of market trackers like Coinmarketcap and Livecoinwatch to weed out scammers who blatantly fake crypto trading volumes, a figure that according to Ribes, currently amounts to more than $3 billion of nonexistent trade.