Binance’s apparently squeaky clean record from the often maligned Blockchain Transparency Institute (BTI) could be under threat as yesterday’s (October 23rd) of trading appear to show wash trading from the exchange.
With volatility being prevalent in Bitcoin’s price this has been seen in the trading volumes. Bitcoin has fallen, most clearly on the 25th of September and another drop in price on October 23rd at around 12:40pm UTC.
That exchange is Binance and the vast differences have led to suggestions that the exchange is participating in wash trading. Binance had an insurance fund over 10mn USD (as of 23 Oct 2019) and their latest daily trading volume passed 0.8bn USD. This is different to other exchanges, so lets look closer at the mounting evidence that Binance was practicing wash trading.
Bitcoin price volatility is usually seen in the statistics of exchanges. Most derivative exchanges like Huobi and Bitmex saw similar statistics. Yet one exchange has been largely different to the others.
The case for Binance Wash trading
As previously mentioned, exchanges usually see a shift in trading volume when the market is volatile.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.
The figures show below, OkEx, Bitmex and Huobis trading figures for the price drop on the 25th September and 23rd October showing a trading volume shift. Coincidentally, they are all fairly similar and vast.
Yet, Binance figures for the dates of Bitcoin price drops the trading differential is not as large or remotely similar. The October 23rd date illustrates this pertinently.
This is without a doubt exhibit A for the wash trading claim, bt the evidence does not stop there. The proof only increases when you look at the data for a 4 hour period.
The statistic in terms of Bitcoin traded remains largely similar between Bitmex (30K-100K), Huobi (20K-70K) and OkEx (20K-80K). Binance, on the other hand, is oddly stable and is far lower at just 5K. The pattern is also different.
A closer look at order book depth also brings up 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.
Therefore, with this statistic in mind, how can OkEx and Binance’s futures trading volume have Binance showing a greater amount yet their order book be less? Some would say this is a clear indication that Binance had washed some trading off the books.
We will have to wait and see the verdict from the Blockchain transparency institute (BTI), a for profit company who listed a number of exchanges as wash traders. There are certainly some questionable statistics there though.
What do you guys think? Let us know in the comments below.