Blockchain Transparency Institute claim $100 million has been stolen from the cryptosphere in 2018

The Blockchain Transparency Institute (BTI) claim that up to $100 million has been stolen from the cryptosphere in 2018 as a result of wash trading.

The BTI are a group of blockchain data researchers looking to bring transparency and trust to the world of cryptocurrency. They began collecting data on web traffic in August, before their November report released information collected from exchanges on mobile app usage and Application Programming Interface (API) trading.

Their recent December report has focused on specific trading pairs listed on exchanges, which they claim show “clear evidence of wash trading” as per their blog post.

Wash trading is a form of market manipulation in which an investor simultaneously purchases and sells the same financial asset to create misleading information and artificial activity within a given market. Typically, an investor will place a sell order, then place a buy order from themselves.

This in turn creates an artificial increase in trading volume, giving the impression that the stock or crypto is more in demand than it actually is. A second use of wash trading is to generate commission fees for brokers in order to compensate them for something that cannot be publicly paid for. Wash trading has been illegal in the US since the Commodity Exchange Act was passed in 1936.

The data they have sifted through encompasses “order books, analyzing volume data points” and conversations with “market makers, high frequency traders, and trade consultants.”

Interestingly, the report claims that “four different bot strategies are used to inflate exchange volume numbers.” However, they are unable to make the exact data they used public.

The BTI report explains how “the average project spent over $50,000 this year in listing fees from exchanges,” which equates to a total of “$100,000,000 stolen in 2018 from the crypto ecosystem.” It continues on to reveal that over 50 exchanges have been “wash trading over 95% of their volumes,” resulting in a “$500,000-a-year scheme.”

At the close of their report, the BTI state “heading into 2019, we will continue collecting true volume data on individual pairs in an effort to curb further manipulation.”

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