Fake volumes in cryptocurrency markets – Then and now

Published on: 10/06/2020 | Updated on: October 16, 2025

In March of 2019, the whole crypto community stood at a standstill when a surprising revelation was brought upon them.

According to Bitwise’s SEC paper, more than 95% of reported exchange volumes is actually fake!

From the several billion $$ that were supposedly trader per day, only about 271 million were actually executed orders.

Paybis has prepared a useful infographic to illustrate just how shady some of these exchanges’ practices have really been:

With more than 300 exchanges listed on CoinMarketCap, and a sample of 81 platforms involved in this study, why would so many of them lie about their actual numbers?

On a second look, it is quite easy to understand the motivation behind their actions. Here is why:

• Top-tier exchanges are more popular with the public – Cryptocurrency exchange platforms that are ranking on the top of CMC’s exchange list receive more attention by the public and the media. As a result, these platforms become more popular over time, increasing their authority in the space.
• Higher trading volumes = more $$ – Exchanges with high trading volumes indicate the potential of increased liquidity for new listings. As a result, services like ICO’s, IEO’s and Altcoin listings can become more expensive, since more people will “supposedly” trade these new coins.

Given this information, it is only natural the majority of low-tier exchanges would attempt to increase their rankings using “gray” shortcuts. But what does this show about the platforms that do not engage in fake volume activities?

The golden 10

The infographic above mentions the 10 platforms that report reliable data, no matter how their rankings will be affected by it. First and primary example is Binance. Despite their low rankings up until March 2019, the platform has become the most popular cryptocurrency exchange worldwide.

While it doesn’t hold a BitLicence like all the rest of the top platforms – it doesn’t operate in the US so it doesn’t need on – it managed to strike out a huge deal, buying CMC at an undisclosed amount.

The decision to sell CoinMarketCap to a cryptocurrency exchange was met with some skepticism at first, but as with previous acquisitions, Binance chose to allow the platform to operate independently.

So what does this tell us about rankings? Experienced investors can see right through it and don’t really get affected by it.

Exchange rankings have changed

And in latest news, the platform has totally reformed the way it shows data of exchange platforms. After the initial introduction of the “Liquidity” metric, which followed Bitwise’s report, CMC has now completely transformed the way they rank exchanges.

Let’s take a look at some of the biggest changes that occurred with this redesign:

1. The Web Traffic Factor – CMC now provides a new metric that cross-compares data from multiple web traffic indicators, giving a final score between 0 and 1000. Binance, the exchange that acquired CMC, is the only platform with a top score of 1000. This has raised a few eyebrows, but most find that they deserve the first spot.
2. Liquidity Scores – Liquidity was first depicted as a 24-hour volume dataset derived from many of the indicators previously used to collect exchange volumes. After the acquisition occurred, CMC now lists liquidity based on a score that derives from multiple factors.
3. Other information – Apart from these two changes the rest looks pretty much the same. There is no longer a drop-down menu that allows users to filter exchanges by a particular metric. Instead, all metrics are shown on a static page that is now accessible by simply clicking on the “Exchanges” button on CMC’s main page.

Pros and cons of this redesign

New users are now able to find what they are looking for in a faster way – at least that’s what most of us would derive at. Fewer clicks to find what you are looking for, and a better overview for those new to the space.

Another benefit is the positive outlook for the future. While we expect the WTF and Liquidity measures to show us their results in a more transparent way (not just a score), we do see that there is an active effort being made to promote mainstream adoption and a simpler way to illustrate data.

But not all that shines is gold. While Binance promised to keep its interests apart from CMC, we can see that they have had an enormous influence on exchange listings. Even small details like the Web Traffic Factor score show us just how powerful they can be if they choose to use CMC for self-promotion.

While there is little chance of any of this happening (Binance is the more popular platform after all) there is always a chance that things may go south. As such it may be a good idea to take a step back and consider how these moves will affect the crypto space overall.

Going forward

Fake exchange volumes are hopefully a thing we look back on to learn for the future. However, as the crypto-space becomes “smarter” so do the people that try to outsmart it.

One thing we have noticed, however, is the willingness of companies that survived the latest bear market to improve the space. Their determination to keep building products even though the market is far from its “golden days”.

The popular quote “BUIDL” has been echoing in the crypto markets all throughout the slow, non-rewarding months of 2018. And, just 2 years later, we already see the fruits of their labor come to fruition.

New offers, new products and, most importantly, a revitalized trust that the cryptocurrency space will not only become a very rewarding investment, but also an honest one.

So, closing, all we can say is that patience is the key to success. If you have been in the space long enough, you should be familiar with this already. Especially with crypto, all good things take long, and we have just been through a new halving. So we have lots of exciting times to look forward to!