A glimpse into the dark underbelly of cryptocurrency markets

  • Nic looks at the relationships between exchanges, altcoin developers/promoters and ranking sites.
  • Issuers want to list on liquid markets and exit or pump their positions
  • Exchanges want to advertise themselves as liquid, so issuers will be more amenable to paying listing fees
  • The ‘altcoin casino’ exchanges are mostly unregulated and unmonitored, and can thus get away with virtually anything
  • Many exchanges thus engage in wash trading to make their volumes appear greater and improve their perceived liquidity profile
  • Rankings sites monetize through reflinks and ads, and lack the resources to monitor each exchange, and hence uncritically publish exchange data
  • Wash trading exchanges gain in the rankings on the rankings sites, successfully marketing themselves
  • Exchanges profit, rankings sites profit, issuers profit, all at the expense of investors (who may win in the short term)

Source – Nic Carter’s Medium