Changpeng Zhao, who is the CEO of the biggest cryptocurrency exchange in the world, feels that news of fake trading volumes are useful for the crypto industry.
Recently there were reports about this practice of faking volumes across exchanges in the industry. On that note, CZ, as he is fondly known in the industry, opined that it would help the industry become more transparent. He also defended Coinmarketcap in his remarks:
“It’s not so much Coinmarketcap’s fault, everyone tried to blame on them [sic]. But CoinMarketCap has a very simple reporting mechanism where every exchange reports their own data to them, and they just show it.”
Binance as a company aims to encourage more transparency in the market. Instead of blaming the incident on CoinMarketCap, they are actually working with the CoinMarketCap team to solve the issue of volume faking.
As a strict measure of deterring exchanges from faking volumes, CZ proposed a delisting measure carried out by CoinMarketCap, as a method of reprimanding these exchanges. That would prevent exchanges from faking volumes.
Quite recently, Bitwise Asset Management, a cryptocurrency index fund provider had released a report, which highlighted issues with Bitcoin trading. The report stated that almost 95 percent of volume on unregulated exchanges seem to be fake or non-economic in nature. They also blamed Coinmarketcap for creating this issue by listing exchanges with fake numbers.
Bitwise is of the opinion that out of the 81 cryptocurrency exchanges that they had analyzed, Binance was one of the few that has “actual volume”.
This highlights a very pertinent problem in the industry that only the top few exchanges are not propagating. The news of fake volume creates confusion in the market and also unduly influences potential investors.