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I recently had to go through extensive KYC/AML email conversations and phone calls with bunch of exchanges like Coinbase and others. Got me interested how wash
by capableweb 5y ago
I recently had to go through extensive KYC/AML email conversations and phone calls with bunch of exchanges like Coinbase and others. Got me interested how wash trading could happen, when they were so strict with me, and which exchanges were investigated.
These seems to be the exchanges they investigated. Would be interesting to see a breakdown of percentage per exchange, as I still don't understand how wash trading can happen at Coinbase since they seem to be very strict.
Exchange Code Exchange Name
Panel A Regulated exchanges
R1 Bitstamp
R2 Coinbase
R3 Gemini
Panel B Unregulated Tier-1 exchanges
UT1 Binance
UT2 Bittrex
UT3 Bitfinex
UT4 HitBTC
UT5 Huobi
UT6 KuCoin
UT7 Liquid
UT8 Okex
UT9 Poloniex
UT10 Zb
Panel C Unregulated Tier-2 exchanges
U1 Bgogo
U2 Biki
U3 Bitz
U4 Coinbene
U5 DragonEX
U6 Lbank
U7 Mxc
U8 Fcoin
U9 Exmo
U10 Coinmex
U11 Bibox
U12 Bitmart
U13 Bitmax
U14 Coinegg
U15 Digifinex
U16 Gateio
- cdiddy2 5y agoYa I seriously doubt there is much wash trading at the Tier A exchanges you listed above.
- nefitty 5y agoThe market is interdependent. Wash trading on one platform benefits all other platforms. When you ask someone the price of BTC they don't say $x on Coinbase, $y on Kraken, etc. Literally all of crypto is a scam. After 10 years there is not one feasible use case that isn't done better through another tool. I don't consider "making black markets and extortion easier" a feasible use case.
- thenanyu 5y agoBut it is a use case, along with gambling via crypto day trading. You may not like it morally and may wish for crypto to be legally banned as a result, but casinos are real and extortion is real.
- danans 5y agoYou are both right, but unlike crypto, casinos and crime facilitating black markets don't pretend to be something other than what they are. However, I tend to think crypto is a bit more than that: an anti institutional weapon. Therefore it's not a coincidence that crypto also serves the above use cases that specifically seek to avoid institutional oversight, or in circumstances where institutions have already failed (i.e. Venezuela). Once the illusions of anarcho-capitalist utopia dissolve, that's what's left, and crypto's fundamental market value - minus the greater fool stuff - reflects the sum of 1) the fear of and 2) enthusiasm for the destruction of institutions, with both of those pushing the value up. Stronger, trusted, adaptive, and accountable institutions that provide their societies with security and broadly shared well being will push it down.
- joshfraser 5y agoOh yeah? Ever tried to send funds to a family member on the other side of the world over a weekend?
- coding123 5y agoNot on the other side of the world but my parents send me through Zelle and works pretty easily - hits the account same day.
- tata71 5y agoI tried Zelle the other day to send a payment. New user? Payment frozen, no recourse until Monday morning on a Friday, late afternoon. I'll stick with Coinbase, if I want centralized risk.
- mikegreenberg 5y agoFWIW, cryptocurrency settles in seconds.
- NikolaeVarius 5y agohttps://coinmarketcap.com/alexandria/article/how-long-does-a-bitcoin-transaction-take https://coinmarketcap.com/alexandria/article/how-long-does-a... > On the Bitcoin network, the average confirmation time for a BTC payment is about 10 minutes. However, transaction times can vary wildly. This is because it is affected by factors such as the total network activity, hashrate and transaction fees. If the Bitcoin network is congested, there will be a backlog of transactions in the mempool. This would result users paying more in transaction fees to get transactions to go through faster. This occured in April 2021, where average Bitcoin transaction fees reached $59.
- mikegreenberg 5y agoI'm familiar with cryptocurrencies. I did not say Bitcoin. One counterexample isn't representative of current options. There are plenty of coins which clear in seconds.
- temp8964 5y agoWhat if the reason of slow adoption is traditional institutions act against it?
- coding123 5y agoI don't think that's the case. There was a period of time about 5 or so years ago where you could pay with Bitcoin almost anywhere. That's all but disappeared after a wave of $100 transaction fees hit. Use case was killed by itself.
- sokoloff 5y ago> There was a period of time about 5 or so years ago where you could pay with Bitcoin almost anywhere. I do not recall this time at all.
- mikegreenberg 5y agoSurely, that means it never happened. You must be some sort of oracle. https://www.techrepublic.com/article/pay-with-bitcoin-10-of-the-most-interesting-places-to-spend-it/ https://www.techrepublic.com/article/pay-with-bitcoin-10-of-... https://money.cnn.com/2014/09/26/technology/paypal-bitcoin/ https://money.cnn.com/2014/09/26/technology/paypal-bitcoin/ https://www.businessinsider.com/dell-becomes-biggest-company-to-accept-bitcoin-internationally-2015-2 https://www.businessinsider.com/dell-becomes-biggest-company... https://money.cnn.com/2014/12/11/technology/microsoft-bitcoin/ https://money.cnn.com/2014/12/11/technology/microsoft-bitcoi...
- sokoloff 5y agoWhat’s the threshold for “pay with Bitcoin almost anywhere”? 95%? 90%? Surely the fact that articles are written about individual retailers who are now (then) taking Bitcoin is evidence against the acceptance of BTC being pervasive as a payment instrument rather than evidence in support of it.
- 5y ago
- _3u10 5y agoCompletely agree, I’d much rather lose at least 6.2% (if not 20%) in totally legitimate fiat currency inflation than see 200% returns on crypto as a result of that money printing. QE definitely isn’t wash trading.
- nefitty 5y agoThat's how all Ponzi schemes are marketed. "I got rich, so can you!"
- ur-whale 5y agoIf you are using the P word in a conversation about crypto, chances are you are not adding much value to the conversation. That particular dead horse has been beaten to a point where all is left are strictly people adhering to dogma on one side or the other of the conversation. Try tulips next, to make the picture complete.
- nefitty 5y agoIt's a cliché for a reason.
- tata71 5y agoThis is why I didn't get a desk job where I had to show up by 8am...seemed like a cyclical ponzi scheme.
- _3u10 5y agoLike social security where old investors are paid out from the income of new investors? And your "investments" are just IOUs from the general revenue fund of the same company?
- carnitine 5y agoHow is QE even remotely wash trading?
- _3u10 5y ago
- ishjoh 5y agoI would say there are four important use cases of Crypto so far. 1) NFTs - digital ownership 2) DAO - organizations without having to setup an LLC that allow voting etc 3) Accounting for low trust societies (supply chain management, etc) 4) Value store for very high inflation currencies, or states with severe problems
- abakker 5y ago1. Digital ownership of a token. Digital assets can still be copied and distributed. Notions of ownership and title in digital are still inherently problematic. 2. This is probably not a feature society needs. 3. Possibly good? I'd say instead of "low trust" being the feature, "no natural owner of the database" describes the supply chain situation better. 4. maybe. USD, Gold, Etc have historically been good at this.
- ishjoh 5y ago> Digital assets can still be copied and distributed. Notions of ownership and title in digital are still inherently problematic Some NFTs come with additional publishing rights for the underlying asset. For example Eminems sold an NFT that contained to the rights and a different rapper bought it to make a song with it: https://bitcoinist.com/the-rapper-who-bought-eminems-nft-for-100k-and-transformed-it-into-7m-views/ https://bitcoinist.com/the-rapper-who-bought-eminems-nft-for... I think we're going to see more stuff like this in the future. > 2. This is probably not a feature society needs You might be right, but we do allow LLCs so we do allow a more difficult way to do the same thing. There is less regulation around DAOs but that's starting to change in some states, I'm for letting the experiment run > 3. Possibly good? I think this is a net benefit > 4. maybe. USD, Gold, Etc have historically been good at this. Yeah, for this one in particular I was thinking of stable coins that are backed by USD
- Uehreka 5y agoIf someone sells the NFT and publishing rights to a work at the same time… couldn’t they just sell the publishing rights? It’s like you’re buying the publishing rights and getting a receipt for your purchase and people are acting like the receipt is the big deal.
- betwixthewires 5y agoIf you don't consider black markets a feasible use case you're cherrypicking.
- nefitty 5y agohttps://goo.gl/search/Define+feasibility&hl=en https://goo.gl/search/Define+feasibility&hl=en feasibility (noun): state or degree of being easily or conveniently done The originator, Ross Ulbricht, is in prison for life. Anything that involves any remote possibility of that is not "feasible" to me, specifically in terms of the strength of my own self-preservation instincts.
- betwixthewires 5y agoSo because it isn't a magic bullet that makes participants bulletproof it's infeasible? Would you say dollars are infeasible as a black market tool as well? What about cocaine?
- deleted 5y ago[deleted]
- arez 5y agoHow about the exchanges do it themselves because there's no regulation and if they don't do it, the volumes would be way to low
- ashwagary 5y agoI have a feeling you are correct. Exchanges have the lowest barrier to entry, non-public client position information, and cheaper access to capital than most market participants.
- loeg 5y ago> We quantify the wash trading on each unregulated exchange, which averaged over 70% of the reported volume. Coinbase isn’t one of the unregulated exchanges.
- capableweb 5y agoToo bad neither the title of this HN submission nor the title of the paper says "Crypto Wash Trading on unregulated exchanges", but I guess that wouldn't write as many headlines.
- pja 5y agoIt’s right there in the abstract.
- whyenot 5y agoYes, but I think the person you are responding to has a good point: it should be in the headline, as adding one more word ("unregulated") is a pretty significant distinction.
- ziddoap 5y agoWhen the title just says "70% of the volume in the top crypto exchanges", perhaps you can forgive the skim-readers of the world for believing they meant "top crypto exchanges", as stated, rather than "top unregulated changes". Sometimes it's nice for the title to honestly represent what the paper/blog/whatever is about without having to dive into the abstract. I think there might even be some word for having titles which somewhat misrepresent the piece in question, often used when the title elicits more clicks by leaving out a key piece of information.
- pbhjpbhj 5y agoIs there somewhere to read a quick summary of the regulation of crypto exchanges, I don't know they'd become specifically regulated?
- bduerst 5y agoHow does Coinbase self-regulate wash trading?
- JumpCrisscross 5y ago> How does Coinbase self-regulate wash trading? Coinbase follows KYC laws. That prevents one person from opening two accounts and trading between them.
- tw600040 5y agoHuh. What if 2 people decide to do it?
- JumpCrisscross 5y ago> What if 2 people decide to do it? Two accounts trading back and forth will light up anti-spoofing tech from the 1980s. Keep in mind that the AML regulations Coinbase follows are specifically designed to catch fake money movement.
- bduerst 5y agoAnti-spoofing tech for regulated securities. There's no rules for crypto to suggest that Coinbase needs to (or would) flag a group of individuals doing this.
- JumpCrisscross 5y ago> Anti-spoofing tech for regulated securities. There's no rules for crypto to suggest that Coinbase needs to (or would) flag a group of individuals doing this. It's the same stuff that catches money laundering. Coinbase isn't exempt from anti-money laundering laws. (With respect to Coinbase not being subject to the Exchange Act, that's very much an open, if irrelevant to this discussion, question.)
- 5y ago
- anonu 5y agoWhat's a "regulated" exchange in this context? US Exchanges are "self-regulated" and ultimately answer to FINRA and the SEC. Any rules they publish must be approved by the SEC. Theres no such process (AFAIK) with "panel A" firms. Its still the wild west. Does regulation mean KYC for client onboarding? Thats a completely different thing. We're not talking about on-exchange trading rules and compliance monitoring in that case.
- capableweb 5y agoWhy don't you read through the paper? Here is the short answer: > We adopt the definition of regulated exchanges from the state of New York, which has one of the earliest regulatory frameworks in the world. [6] > 6 Regulated exchanges are issued BitLicenses and are regulated by the New York State Department of Financial Services. Bitlicence carries some of the most stringent requirements. Our main results are robust to alternative classifications of regulated exchanges. As of June 2020, NYDFS has issued licenses to 25 regulated entities, six of which provide crypto exchange service. They are Itbit, Coinbase, Bitstamp, Bitflyer, Gemini, and Bakkt (futures and options only). Further information can be found at: https://www.dfs.ny.gov/apps_and_licensing/virtual_currency_businesses/regulated_entities https://www.dfs.ny.gov/apps_and_licensing/virtual_currency_b.... (Last accessed: July 3, 2020)
- joshfraser 5y agoLest anyone think that the solution is more regulation, it's worth looking at the impact of the BitLicense. This overbearing regulatory framework has stifled innovation and forced crypto startups to leave the world’s leading financial hub and build their companies elsewhere. Compliance costs millions of dollars, leaving most startups with no viable option except to block their users from accessing their services in NY. No one wins. In their misguided attempt to protect their citizens, they inadvertently blocked New Yorkers from participating in the best performing asset class of the decade.
- sokoloff 5y agoWhat makes you think it was inadvertent?
- avnfish 5y agoBreakdown of percentage per exchange is available on table 7 (pp 46). Binance, for example, is measured at 46%. Typically the lower tier exchanges have higher levels of measured wash trading.
- capableweb 5y agoThank you, missed that when skimming.
- ur-whale 5y ago> I recently had to go through extensive KYC/AML I'm not entirely sure how KYC/AML are related to wash trading ... In other words: how is the amount of checks they impose on their customers related to what goes on in their trading engine? Or do you assume that because they're very strict on one thing necessarily implies they're strict everywhere? That's quite a stretch.
- capableweb 5y agoWash trading is not just one thing, I give you that. But a frequent way of achieving wash trading is to buy and sell from yourself via multiple accounts. KYC/AML + Terms of Conditions specifying you can only own one account prevents that, as much as it can at least. Even if you are two different people just trading between you, AML laws will prevent that and surely Coinbase has the most basic checks in place to detect something that simple.
- austinheap 5y agoGreat data! I am no longer confused as to why the Binance Bridge between ETH and BSC is getting shut down…in six days.