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Crypto Wash Trading

arxiv.org

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Re: Crypto Wash Trading

#201

Post by NikolaeVarius »

mikegreenberg wrote: post #175
coding123 wrote: post #104

Earlier quoted context omitted.

Not on the other side of the world but my parents send me through Zelle and works pretty easily - hits the account same day.

FWIW, cryptocurrency settles in seconds.

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.

Re: Crypto Wash Trading

#202

Post by sabujp »

There's also "legal" wash trading, e.g. the same institution/person putting in large BTC spot buy orders and then shorting the BTC future. This is how companies like crypto.com, celsius, blockfi, etc are now able to give investors 8%+ on their USDC because the investors need the cash for expensive futures contracts. The companies loan the cash out to hedge funds at high interest rates, take a cut, and give the rest to you.

Re: Crypto Wash Trading

#203

Post by KarlKemp »

gillesjacobs wrote: post #118

This paper jumps the gun. Detecting wash trading by examining distributions over rounded order prices is a strong and dubious claim for which they provide little evidence. The author's equate wash trading to non-rounded, clustered prices which really just indicates automated trading. Now automated ("bot") trading is a technology needed for exchanges wash trading sure, but not exclusive evidence of it. Automated tradi…

Their idea does show a pretty stark difference b/w "regulated" and "unregulated" exchanges, however, as would be expected if that activity is fraudulent in some way.

Re: Crypto Wash Trading

#204

Post by darawk »

Closi wrote: post #132
gillesjacobs wrote: post #118

This paper jumps the gun. Detecting wash trading by examining distributions over rounded order prices is a strong and dubious claim for which they provide little evidence. The author's equate wash trading to non-rounded, clustered prices which really just indicates automated trading. Now automated ("bot") trading is a technology needed for exchanges wash trading sure, but not exclusive evidence of it. Automated tradi…

Benford's Law is a pretty established method of detecting fraud in forensic accounting.

Benford's law does not apply here. Benford's law is designed to separate human generated numbers from truly random ones. The numbers generated by exchange trades are generated by humans choosing trade sizes. This entire methodology is a complete joke.

Re: Crypto Wash Trading

#206

Post by jjk166 »

loeg wrote: post #54
aeternum wrote: post #21

Earlier quoted context omitted.

There is still an order book so to get the price to rise or fall, the trader would have to buy or sell enough to clear the book. How does trading back and forth with themselves do anything other than generate fees for the exchange?

The book is tiny and the exchange is probably the one doing the wash trading.

Why wouldn't the exchange just lie and say that volume is higher than it actually is?

Re: Crypto Wash Trading

#207

Post by thebean11 »

dragontamer wrote: post #159
thebean11 wrote: post #109

Earlier quoted context omitted.

Yes if it's a third party doing it, it's especially a win-win for the exchange as they are getting paid fees on all that transaction volume. I kind if assumed it was the exchanges themselves faking it. Wash trading without colluding with the exchange is pretty expensive.

All exchanges, even legitimate ones, offer discount packages on anyone who has high volume. Ex: Interactive Brokers (a legitimate online exchange for stocks) hit it big with its monthly-subscription model: $$subscription / month $20 / for severely discounted trades (fractions of a penny per trade). https://www.interactivebrokers.com/en/index.php?f=1590&p=sto...

Yeah, I get it, but unlike stock transactions crypto exchanges generally take a % of volume traded unlike stock exchanges which take a per-transaction fee instead (I think options might be an exception where there's a per-contract fee..not sure).

Re: Crypto Wash Trading

#208

Post by MuffinFlavored »

gillesjacobs wrote: post #118

This paper jumps the gun. Detecting wash trading by examining distributions over rounded order prices is a strong and dubious claim for which they provide little evidence. The author's equate wash trading to non-rounded, clustered prices which really just indicates automated trading. Now automated ("bot") trading is a technology needed for exchanges wash trading sure, but not exclusive evidence of it. Automated tradi…

> Automated trading strategies (e.g., "grid trading") are really popular

Why? After buying and selling side fees, is it easy to make a profit in an automated way with crypto?

Re: Crypto Wash Trading

#209

Post by santiagobasulto »

gillesjacobs wrote: post #118

This paper jumps the gun. Detecting wash trading by examining distributions over rounded order prices is a strong and dubious claim for which they provide little evidence. The author's equate wash trading to non-rounded, clustered prices which really just indicates automated trading. Now automated ("bot") trading is a technology needed for exchanges wash trading sure, but not exclusive evidence of it. Automated tradi…

I came looking for your comment. Someone applying some common sense to the “research”. Yet, the post has >400 points.

Feels like these days anybody can post a paper and get uncountable widespread with 0 backings for their research.

In nutrition this happens A LOT. Things like: “meat causes cancer in 70% of the population”. And then you read the paper and they did the study on 80 people between 60-90 years old. There’s just no scientific/statistic rigurosity.

Re: Crypto Wash Trading

#210

Post by capableweb »

pbhjpbhj wrote: post #195
ziddoap wrote: post #96

Earlier quoted context omitted.

When 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 w…

Is there somewhere to read a quick summary of the regulation of crypto exchanges, I don't know they'd become specifically regulated?

Answered in another comment: https://news.ycombinator.com/item?id=29279685
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