Binance, one of the worlds largest exchanges, could be wash trading statistics have revealed, putting into question the legitimacy of the Changpeng Zhao run company.
Volatility has been especially evident for Bitcoin’s price recently. Bitcoin has fallen dramatically, most notably on the 25th of September and there was another drop in price on October 23rd at around 12:40pm UTC and as such the trading volumes have followed suit.
Exchanges should see a reflection of this in their statistics. For example, OkEx saw its BTC spot price decline by 5% within the initial 4 minutes session on October 23rd and the quarterly Futures contract, dumped by 6.2% during the same time window.
Almost all other derivative exchanges like Huobi and Bitmex also saw the same statistics. Yet Binance did not see a similar drop, so why might that happen?
A close look at their data in comparison to other major exchanges reveals some potentially damning evidence. Are Binance engaging in wash trading?
The aforementioned statement that exchanges usually see a shift in trading volume when the market is volatile is evident as the figures show below. OkEx, Bitmex and Huobi’s trading figures for the price drop on the 25th September and 23rd October illustrate a big difference and drop.
However, Binance does not correlate. The figures for the dates of Bitcoin price drops shows the trading differential is not as stark. This is most clearon the October 23rd date.
This has caused cause for concern for many. However, this could be a coincidence and is not enough to concrtely say that wash trading is happening. Yet, the evidence only increases when you look at the data for a 4 hour period.
4 Hour Period
As you can see the statistic in terms of Bitcoin traded remains largely similar between Bitmex (30K-100K), Huobi (20K-70K) and OkEx (20K-80K). Binance though is eerily stable and is much lower, staying at just 5K. The pattern is also different to the other three exchanges. This only adds petrol to the flames.
Order Book Depth
Possibly the most damning statistic is hen you take a closer look at order book depth also reveals some issues. As the figure below shows, BitMex had a quote size around 100 BTC on average ( [bid size + ask size] / 2), OKEx around 60 BTC while Binance was merely less than 2.5 BTC.
The questions begin to start when you make the comparison between OkEx and Binance’s futures trading volume was looked at. Binance had the greater amount. How can their order book be less, but their trading volume higher? It would seem Binance has washed some trading off the books.
Whether Binance or the Blockchain Transparency Institute (BTI) will look into this remains to be seen. But the evidence is clear for them and the industry to see. Wash trading is a part of exchange but must be stamped out and it should start at the top.