Market manipulations actually exist, we have heard of them, but now we are starting to hear how they happen from one view. 20-year-old Alexey Andryunin, is making a living off manipulation of trading situations for cryptocurrency professionals/ exchanges.
Andryunin is a sophomore at Moscow State University and the co-founder of Gotbit, a firm that specializes in making cryptocurrencies or tokens record false active trade with programmed bots. His service is enabled by a two-man shop who program bots to trade a token back and forth with each other on also-ran exchanges until it has enough “volume” to get listed on CoinMarketCap, all for a fee. Coinmarketcap is a popular and influential crypto data site and getting high ranking on its platform means attention and more business from investors. Clearly, this business is not exactly legitimate but the exchanges even patronizing it in the first place seem to see this a strategy to up their game get their native currencies and platforms on the map.
Explaining why Gotbit is not registered in any jurisdiction, Andryunin was blunt, telling CoinDesk: “The business is not entirely ethical.”
One of several U.S. firms seeking regulatory approval to launch a bitcoin exchange-traded fund (ETF), Bitwise Asset Management has stated that there are inflated numbers in the market, estimating that only 10 exchanges publish reliable data about volumes on their platforms, without inflated numbers and about 95 percent of bitcoin trading volumes are faked.
Bobby Ong, CEO of crypto ranking portal CoinGecko, said businesses like Gotbit exist and “it won’t be too hard to find such people who can help you with these services.” “These operators usually go around claiming that they can do market-making for token projects and inflate trading volume for a fee. This practice is also known as wash trading and is illegal,” Ong said. He also noted that there's a possibility of detecting 'wash trading' from the outside
For anyone who's actually paying attention to trade patterns over time and the order book of exchanges, the falsifications can be noticed.“If trades happen outside the bid-ask spread or constantly within the bid-ask spread, this is a clear example of wash-trading in action. One can also look at the trade interval and trade size to detect common recurring patterns to find wash-trading activities.” The first known and largest cryptocurrency by market capitalization, bitcoin does not even trade as actively as these little-known cryptocurrencies do on these exchanges they pay to be "promoted" on.
For obvious reasons, you'll hardly hear manipulators openly discuss their line of work. Andryunin revealed how his Gotbit’s business works in recent interviews; helping crypto projects to literally fake it until they make it.
Andryunin is an applied math major but has hardly made it to his classes owing to the "lucrative business" he just started. When initial coin offerings (ICOs) were still in vogue, he started Gotbit with a fellow undergrad in 2018. He said that almost everyone among his classmates is now obsessed with crypto. The trading bots operate with codes written by his partner and while he sources for clients to sell Gotbit’s “market-making” services. For a small exchange listing, a crypto project is billed $8,000 and $6,000 covers a month of supporting fake trading volumes via algorithms imitating normal market activities.
For the gold prize package; getting a token listed on CoinMarketCap the fee climbs to about $15,000. A client's crypto projects need to be listed on two small exchanges first before being able to cut it for the influential data site. Andryunin believes that these platforms would die without artificial volume. When Gotbit’s bots are inflating the volumes of altcoins, he notes that these exchanges on which they are listed are aware or detect the manipulations, but higher numbers are in these exchanges’ own interest. For this reason, they most likely wouldn't see a need to investigate it. About $20,000 at recent prices is charged in bitcoin by these exchanges to list a token without any other real criteria according to Andryunin. He mentioned Hotbit, based in Shanghai, and BitForex in Hong Kong as examples of exchanges with such standards, Neither exchange responded to CoinDesk’s requests for comment by press time.
In the same light as well, Alameda Research, a crypto trading firm had noted this in a recent report : “It’s well-established that many exchanges likely engage in practices to inflate the volume they report in order to drive interest in their platforms and to attract new customers,” The firm had analyzed the order books and trading history of 48 crypto exchanges worldwide. Only 14 of them were found to be genuine as regards trading volume. Andryunin said noted that his company, Gotbit may be a huge source of liquidity for the clients. “These small exchanges, I don’t even get it what they are living off, there are no real volumes there.” : he said
CoinGecko’s Ong said optics are indeed a motivation for many crypto teams. “Token projects are sometimes pressured to use such market-making operators because they need to show their major investors and token holders that there is significant market interest in their project and things are going well,” he said. “Some are also doing it because they do not want their price to fall precipitously and want to maintain an ‘optimal’ price or have it increase over time.” He also added that pressure also surmounts from the required minimum trading volume or possible de-listing if trading volume is low amongst other criteria for listing.“Thus, faced with a delisting option, token projects engage these market-making firms to inflate their volumes artificially,” Ong said.
Your favorite token may even be a client to Gotbit's unpopular business as the CEO claimed that a project that had a strong team and business model from the beginning made it to the top 100 on CoinMarketCap. He didn't name the token, however. This is not to say that these token projects are illegal or condemned but they probably just want to measure up and make ends meet. “They wanted to get listed on large exchanges, and get some cash, too,” Andryunin said.
Credits- Anna Baydakova
Published at: 2 weeks ago
Published at: 2 months ago
Published at: 2 months ago
Published at: 2 months ago