As institutional traders cast a critical eye on crypto, concerns over fake exchange volume re-emerge

Chris Dannen

By Chris Dannen

An anonymous institutional trader is the source of a story alleging fake volume on the San Francisco-based exchange Kraken. Claiming that just a $10,000 ETH order can be enough to push the price down 4%, the trader infers that daily volumes on Kraken (which number $12M per day for ETH) aren't what they appear to be. He says: 'We are not talking about poor execution on an illiquid token. We are talking about the most liquid token on the planet and execution on the platform that is nowhere near where other exchanges are executing at the same time. That shows complete lack of liquidity and market makers, and a complete disregard for real investors who believe Kraken is offering best execution.'

Suspicious behavior on Kraken exemplifies the gap between crypto and legacy market structure
"In a later conversation with The Block, the trader said they believe Kraken’s liquidity is clearly not what it’s actually reporting, and that the exchange could be allowing algos to 'stop hunt' by providing data on where they sit in the order book."

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"Crypto Integrity, a project aimed at fraud detection and forensics within the crypto market, released a report that analyzed real order book depth on select liquid trading pairs and found that up to 88% of reported volumes in February were artificial at some of the highest reported volume exchanges. On some less liquid trading pairs, the group estimates up to 100% of the volume is fake."

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