Report: Top Crypto Exchange Bithumb Faking Up To 94% Of Trading Volume; Bithumb Denies Allegations

Cryptocurrency exchange rating service CER has accused Korea-based Bithumb, the world’s second-largest crypto exchange by volume, of faking much of its trading volume since late summer 2018.


Analysis of BTC trade volume on Bithumb shows a significant rise on August 25 and drop on November 12.CER

In September, CER says, Bithumb ranked at the bottom of the top ten global exchanges as measured by CoinMarketCap, at around $350 million in daily trade volume. But by November 11, Bithumb peaked at $4.4 billion, more than 12 times as much. Today, Bithumb ranks second on CMC’s list of crypto exchanges as measured by reported volume at $1.4 billion. (Bithumb does not appear on CMC’s “adjusted volume” ranking.

The reason, according to CER?

Wash trading, or simultaneously selling and buying at the same time to create misleading and artificial activity.

“Judging from our multifaceted investigation on Bithumb charts we see the signs of trade volumes manipulations, specifically, wash trading,” CER marketing lead Gleb Myrko told me via Facebook Messenger. “Having calculated Price-Volume Correlation we came to conclusion that the trade volume performance is not linked to price fluctuation on the exchange.”

One example of odd trading patterns includes a 10X jump in BTC daily trade volume in September, which does not appear to be accompanied by fundamental causal factors.

Other examples include strange activity spikes in the first few minutes of the 11AM hour daily that delivered 95% of the daily total volume, and irregular trade volumes that didn’t align with price moves, CER says.

Trade activity spikes during the first few minutes of an hour delivered 90-95% of daily total volume, says CER.CER

In addition, average transaction size ballooned from .21 BTC in the beginning of the summer to a very significant 5.88 BTC, or $37,600 USD, from October 15 to November 11.

Transaction size grew significantly from earlier in the year.CER

The trades followed an odd pattern, as well. For example, BTC transactions on September 9 totaled an astounding 7,500 in just five minutes. That’s 39% of the day’s total trades, and 94% of the whole day’s volume.

According to CER, other coins showed similar patterns, including LTC, ETC, XMR, ZEC, OMG, and BTG.

One coin, WTC, showed the most intense artificial activity, CER says.

“WTC stands out from all the coins we observed, as it was only listed on the exchange on the last day of August and had the shortest pump period which started on October 28th and lasted till November 11th,” CER states in a document shared with me. “For that reason its pump was one of the most intensive. The inflated daily volume of Waltonchain jumped by 350 times from 348k WTC (on average prior to the pump) to 122.5mln WTC (on average during the pump) only to then drop by by 1,450 times in one day from 206.7mln WTC to 141.8k WTC on November 12th.”

I asked Bithumb about the allegations, and the company dismissed them out of hand.

“Bithumb is doing nothing to inflate trading volume,” an unnamed company representative told me via email. “Bithumb is not selling mining-based coin. Bithumb is trying to get more customers by providing various promotions just like any other company in the world as a normal business.”

CER is a service by Hacken Ecosystem, and Hacken offers a “white hat” community token. Concerned that these allegations might be motivated by business concerns, I asked Hacken if the company had ever tried to list on Bithumb.

The answer?

“No, never.”

Cryptocurrency experts I spoke to did not find this kind of behavior difficult to believe, though they stressed that to evaluate this specific accusation they would need to review the evidence carefully.

That said, there seems to be little trust in the crypto world … perhaps appropriate for currency which is supposed to function in a trustless environment. Or, perhaps not.

“They all inflate numbers,” says Aryeh Altshul, CRO at Hexa Labs, a blockchain consultancy. “It’s the normal practice in crypto.”

All of the non-U.S. exchanges are inflating transactions, agrees Brandon Wirtz, CEO of AI company Recognant, adding that many in the U.S. are doing the same … and using buffers between legitimate buy and sell bids to buy and re-sell coins between the kosher trades.

“It causes volatility and velocity which can be good for 50 percent-plus more traffic,” he said.

Crystal Clare Stranger, founder and CEO of PeaCounts, a blockchain-based payroll payments company, says that this is quite possible and even common.

“In the crypto space it is common to follow the adage of ‘fake it ’til you make it’ and many people grossly exaggerate how successful they are. Many companies have used market manipulators to pump the value of their tokens to look successful, and other exchanges have done this to break into the top ten.”

“It is very easy for a centralized exchange to trade dummy accounts off-chain using bots to pop volume,” Stranger added. “And as the exchange themselves bear little cost for these transactions, essentially just the computing cost, [it becomes] very tempting, especially with so many exchanges opening in the last couple years. It is a very competitive market.”

Another expert suggested that this could be connected to Bithumb’s well-publicized hacks in 2017 and 2018.

“Originally the breach on June 19 was thought to have resulted in the stolen crypto being sent to unknown hacker wallets,” says Morgan Steckler, CEO at iTrustCapital, a digital currency retirement planning company. “However, if this recent fraudulent transaction data proves to be true, and if Bithumb was able to evade detection through multiple recent audits of their security and transaction protocols, it is also entirely possible that the 39 addresses thought to belong to the hackers actually belonged to the exchange itself.”

Several experts did not want to be named.

“Basically, take all the illegal stock trading activites that have been banned over the years and move them into crypto. Why? Because it’s the Wild Wild West,” said one, who manages companies on both the fiat and cryptocurrency sides of finance.

“Ghost orders are huge … it’s where you open a buy and sell at the same time across multiple accounts, then close off one side of all the transactions (example buy) side and then run with your short position (sell side).”

Another expert suggests that Bithumb may have inadvertently contributed to Bitcoin’s continuing price collapse.

“According to data reported by CCN, there is certainly evidence to suggest a strong correlation between the timing of Bithumb’s promotion expiration and the sudden, and for many, shocking plummet that continues to play out across the industry,” says Travis Barker, CTO of Dash Marketing and early adopter and proponent of cryptocurrencies. “So far, I haven’t seen evidence to suggest malicious intent. In other words, I don’t know if Bithumb was intentionally or incorrectly inflating volume numbers, or simply running highly successful promotions to that effect.”

CER representatives seem fairly certain that there was intentional malfeasance.

“Bithumb has mastered a multi-factored approach to conceal its foul play,” says CER’s Myrko. “As far as we are able to judge the manipulations were fulfilled via matching opposite orders with the same price or by simply drawing transactions out of thin air, so-called ‘painting the tape.'”

The goal, CER suggests, may have been to establish Bithumb as a leading global crypto exchange. The result, however, could be extremely negative.

It “undermine[s] the entire image of the blockchain sphere as an environment of trust and transparency,” says Myrko. “Such irresponsible activity makes crypto field less than unwelcoming for the investors and industries who saw blockchain as a new opportunity.”

All that said, it’s important to reiterate that Bithumb denies the accusations.

CER is planning to publish all of its data — over 20 pages of charts, images, and documentation of what it considers to be fraudulent behavior.

At that point Bithumb will be able to respond directly to the accusations and, perhaps, offer an explanation.

Author: John Koetsier
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Bithumb Trading Booms after Sale, Outpacing Even Binance!

Trading in South Korean cryptocurrency exchange Bithumb shot up by some 25% over the weekend after the Singapore-based BK Global Consortium bought a controlling share in the platform late last week.

The BK Global Consortium is a blockchain investment company based in Singapore. It is fronted by a South Korean, Kim Byung-gun of BK Medical, one of South Korea’s leading plastic surgery clinics. BK last week bought a 38% share in Bithumb for in the region of USD 350 million – making Kim the company’s largest single shareholder. Per Newsway, the deal involved a purchase of 50% plus 1 share of Bithumb Holdings’ shares in the platform.
Bithumb also announced that it would reward its top 300 traders with some USD 88,500 worth of tokens as part of a forthcoming airdrop event.

South Korean media reports were quick to point out a spike in Bithumb trading following the news, with the company jumping in the exchange rankings by trading volume.

In comparison, in the beginning of October, the exchange was 9th with a trading volume of around USD 350 million.

Per media outlet Newsis, a Bithumb spokesperson stated, “It looks like the strategic alliance with BK, which has its own global blockchain network, has brought about a good response from the market.”

In an interview published by South Korea’s Maeil Kyungjae newspaper, Kim explained his reasoning behind the purchase, stating that Bithumb was “the Samsung of the blockchain industry.” He also hinted that Bithumb might look to invest in blockchain startups in the future, saying, “In the past, many blockchain projects have struggled to survive when it comes to funding. Bithumb could serve as an incubator to support these kinds of companies.”

Asked what sort of role he envisaged himself playing at Bithumb, Kim stated, “I will not be assuming the role of owner – rather I will be acting as the chairman of the Bithumb board.”
Many South Korean crypto enthusiasts have been angered by the move, however with some concerned that the company’s power base could now move away from the country. Commenters on news stories and Telegram groups criticized the government for perceived anti-blockchain development policies. The government talked up a possible blanket ban on trading earlier this year, and has implemented a nationwide initial coin offering (ICO) ban. Seoul also recently removed exchanges’ tax breaks, and has made direct investment in exchanges through South Korean venture capital companies all but impossible.

Bithumb will likely make use of BK’s Singaporean network, as the country has recently served as a destination for scores of South Korean companies wishing to launch ICOs. Bithumb was also rumored to have been on the verge of launching an initial coin offering (ICO) in Singapore though a subsidiary in April this year.

Cryptocurrency has found an unlikely ally in South Korea’s affluent beauty and plastic surgery industries, with scores of beauticians and cosmetic clinics across the country now accepting pay in digital tokens.

Author: Tim Alper
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VeChain (VET) Price Expected to Boom as Bithumb Completes Asset Switch

The Korean exchange activated trading in the new token on September 21.

Bithumb, one of the most active Korean exchanges, has switched to the new VeChain (VET) digital asset, one of the up-and-coming platform coins. Initially, a trading bot discovered the listing, triggering a surge in prices:

A bit later, the exchange issued its official statement and stopped the trading of old VEN coins. VeChain uses the dual-asset model, and only VET will be traded for now. Meanwhile, VeThor (VTHO) is separately finding its marketplaces.

The listing of the VET asset has rekindled expectations of a new price hike. Reddit users are awaiting an immediate effect on the value since Bithumb will provide a diversified trading profile and access to Korean investors.

After the bot tweet, VET climbed from $0.013 to $0.014 at 3:00 UTC. At the time of writing, it changes hands at $0.014262, up around 8% in the past 24 hours. The price increase also mirrors the general market recovery, which has seen all coins posting gains.

Short term, the VeChain project is attractive for the passive income in VTHO from running nodes. VTHO currently trades at $0.0014 on much less liquid exchanges.

Unfortunately, VET no longer outperforms the market and is down 85% from its all-time high. The bullish factor here is that a significant number of the coins would be locked for staking.

Recently, the VeChain platform introduced its first tracking product, aiming to meet the KYC requirements of the crypto sector. In a blog, the company noted:

“The need for KYC and digital ID maintenance is pivotal for blockchain to see widespread adoption across the world not only from a Cryptocurrency point of view but also in general use. Being able to validate, audit, and trustmembers of the system helps reduce bad players as well as allows government and financial institutions better protect its users.”


Author: Christine Masters
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Bithumb will fully compensate investors after hack: ‘$450 million in company fund’

Bithumb has ensured customers that it will fully cover the loss of over $30 million worth of stolen cryptocurrencies during a hack earlier this week. The Korean exchange revealed more details in a statement today.

Bithumb states that immediately after the incident, it reported the hack to the KISA (Korea Internet & Security Agency) following the procedure. The exact amount of cryptocurrency stolen during the hack has not been confirmed yet.

The current expectation is that 35 billion Korean Won was stolen, but Bithumb says: ‘As we undergo the recovery process on each cryptocurrency, the overall scale of damage is getting reduced. Hence we expect that the overall damage will be less than the amount we initially expected’. Details on the exact scale of damage will be announced later.

Bithumb ensures that the damage will be fully covered by the company fund. According to the exchange, there is about 500 billion KRW ($450 million) in the company fund. Next to that, the exchange is considering a compensation for users because of the current withdrawal delays. All the cryptocurrencies of the company and customers are safely stored in the cold wallet, while KRW assets are stored on a bank account. Bithumb states that ‘all the assets of costumers are intact and fully secured’.

Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Crypto Exchange Bithumb Hit With Bill After Tax Investigation Ends

South Korean cryptocurrency exchange Bithumb has been found not guilty of tax evasion, but now faces a massive tax bill, according to reports.

The country’s National Tax Service launched an investigation into the firm back in January amid a wider crackdown on crypto exchanges, and has now cleared the company of wrongdoing. However, Bithumb – one of South Korea’s biggest exchanges by trading volume – now faces a bill for back taxes that totals around 30 billion won (almost $28 million), according to local news source eToday.

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A tax official was quoted as saying:

“The [National Tax Service] has conducted a tax investigation against Bithumb for the 2014 to 2017 business years. I know that Bithumb has decided to pay the related taxes without any objection to the imposed tax amount.”

“No charge of tax evasion was found, so prosecution charges against tax portal were not carried out,” the official continued.

The exchange has reportedly said it is yet to receive a formal notice about the final tax liability.

The South Korean authorities have been intensifying their actions against the country’s crypto exchanges since late last year, moves that followed a ban on initial coin offerings (ICOs) in September.

The country outlawed anonymous trading in January, and has moved to investigate a number of exchanges over possible crimes such as embezzlement and fraud. Most recently, a local police department said that executives at the Coinone exchange will be charged on grounds that its margin trading service is, in effect, illegal gambling.

While it briefly seemed that a ban on exchange-based trading might also be in the works, that possibility seems to have diminished, alongside regulatory moves to once more allow domestic ICOs under stricter rules.

Here at Dollar Destruction, we endeavor to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!
Author: Daniel Palmer
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Bithumb Withdraws PCH Listing after Customer Backlash

South Korean cryptocurrency exchange platform Bithumb has aborted its attempts to list an altcoin called Popchain (PCH), after angry customers complained the exchange was trying to drive up speculation in the market.

Critics have claimed that Popchain is a de facto monopoly, as per data retrieved from Ether Scan, only 50 people currently own Popchain tokens. Some 12 owners account for 95% of the total, while the top three own a massive 65%.

Per media outlet SporBiz, Bithumb said it had postponed its listing on the market because it could not confirm the truth of certain allegations made against Popchain.
The Korea Blockchain Association (an alliance of 23 of the country’s leading exchanges) had also recommended that Bithumb stop and review its procedure before beginning Popchain trading. Investors have claimed the coin was created just two weeks ago, and have stated that no Popchain initial coin offering had been issued, and no other exchanges have yet listed it.

Many have criticized Bithumb’s timing, accusing it of recklessness at a time when many of the country’s exchanges are under intense scrutiny. Bithumb’s biggest rival, Upbit, is currently under investigation by state prosecutors, who believe the company may have issued falsified financial information. The head of two other exchanges were arrested last month, and have been charged with “fraud and embezzlement.”

Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

Author: Tim Alper
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