Providing the space with clean and wash free data

Market Surveillance Report – November 2018

:: It has been 2 months since our initial exchange rankings report as we have been very busy collecting data to provide the most accurate exchange rankings list possible. During this time we have formed transparency partnerships with many data research firms and investor class supporters. In our many interviews with exchange and token executives we have been able to collect very guarded data not available anywhere else in the space.
Our initial report on exchange volumes revealed many of the top 100 exchanges on Coinmarketcap’s rankings using wash trading to gain a marketing advantage over their competitors.  We found many of these exchanges gaining 80-90% of their referral web traffic from CMC alone.  In our recent token project interviews, we have found this allows these exchanges to ask from 5 BTC all the way up to 60 BTC for listing fees. (More of this data will be available on our December report.)
We also found many of these exchanges to be preying on low market cap coins which are desperate for the recognition and volume of a top 10 or 25 exchange.  In many of the crypto projects we spoke with, this also involves supplying the exchange with a large amount of tokens which are then used to massively inflate volume numbers on CMC, luring in prospective traders from other exchanges with much lower, but real volume.
Our research team found many instances where this occurred on most of the exchanges on our Trading Advisory List, as we watched orders being executed between the spread with corresponding 24hr volume numbers all the way up to 10-20x of the 2nd position exchange trading the pair on CMC. As we expand our team, we will start posting this data in real time on our site. We are also taking a closer look at a number of exchanges that were not put on this initial list.
Feedback from our initial report has led to a few changes in our initial report. We’ve added mobile app and API trading data, an adjustment to Chinese based exchanges, as well as set a lower limit on the $ amount traded/user/24hr with these added metrics.  We settled on this lower limit number by averaging the $ amount spent per trader on exchanges which we confirmed volume numbers with.  Exchanges with the lowest volume typically spend less than $300 per user per day.
Mobile app and API trading data was aggregated from multiple mobile web analytics sites as well as from the exchanges themselves. We accepted these numbers from exchanges via video conferences and screen shares to confirm the data.  We found most exchanges unwilling to share this information, however we did get about an I8% sample which were open to being transparent about their numbers.
A few of the exchanges replied with numbers far out of the norm from other exchanges in their unique visitor count group and then refused to provide any evidence to back up their claims.  We stuck with our estimation in these instances, basing this data on confirmed information we have received from similar exchanges, as well as the analytics sites.
Mobile app usage generally ranged from around 50% of web traffic to over 200%.  The Korean based exchanges had the highest amount of mobile users, which is in line with a recent study which found Korean’s using the largest amount of data of any mobile user in the world.  Their mobile app usage was up to 3x their web traffic.
API trading found the majority of exchanges we surveyed between 20 and 35% (API trading numbers were rounded to the nearest 5%.).  Aside from the wash trades, we found trading bots to naturally gravitate toward the exchanges with the largest amount of traffic as well as the exchanges with a transaction mining based fee structure.  A transaction mining exchange incentivizes trading by reimbursing traders up to 120% of their fee through the exchanges native token, which essentially pays bots to wash trade.
The transaction mining exchanges which provided us with their API figures were all at or over 70%.  We noticed the ones with higher actual user trading volume to be closer to 70% with the majority of transaction mining exchanges to be well over 90% bot trading.
In this report we’ve separated out all exchanges with over 80% API trading as these are the top suspects in wash trading exchanges and added their figures instead to a Trading Advisory List. Over 50 of the CMC top 100 were put on this list, however we are still suspect of exchanges with over 50% API trading numbers. Coinex and Coinsuper were the only 2 transaction mining exchanges which were not added.  We found their web and mobile numbers to be to in line with an estimated percentage of API trading under 75%.

This does not necessarily mean that other transaction mining exchanges are using their own bots to wash trade their volumes, just that compared to their actual volume from web and mobile users, they are attracting an excessive amount of bot trades which are using their fee structure for the sole purpose of mining native exchange tokens.
We received a lot of criticism from Chinese exchanges on our initial report on web visitor statistics, so we set out and interviewed a number of Chinese SEO and analytics professionals in the space.  From our conversations we found up to 50% of data being tracked even on in-house analytics software in the country to be under reported due to the Chinese firewall.
We also found data estimated by SimilarWeb (an outside analytics firm) to be under reported by up to 250% from both analytics experts, as well as in-house analytics screens shared with us by exchanges with high Chinese visitor counts.  Based on this information, exchanges with a large amount of Chinese visitors were adjusted upwards by 300%.
We encourage any exchange who wishes to dispute data in our report to contact our research team at [email protected].  If we are able to verify these numbers we will change the report ASAP.
We will need to expand our data collection team to be able to keep an eye on most of the trading pairs and exchanges in the space, and we will be focusing on this expansion throughout the end of the year.  If you are a trader and would like to report suspicious volume or a data analyst who would like to join our team of researchers please reach out to us via our contact page.