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HitBTC partners with CoinGecko to fight fake volume amidst liquidation, wash trading accusations

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HitBTC partners with CoinGecko to fight fake volume amidst barrage of liquidation and wash trading accusations
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HitBTC, the exchange reeling in a slew of controversies arising due to several claims of the exchange being liquidated, has responded with positive action. The Hong Kong-based exchange recently entered into a partnership with CoinGecko, the cryptocurrency data aggregator lauded for the introduction of the “Trust Score” volume estimator.

Following prolonged maintenance issues, the exchange announced the partnership which boasted a core objective of “transparency,” in the “fight against fake volumes,” an ironic statement in light of recent proceedings. The tweet read,

According to two prominent pieces of research, the first by Zerononcense’s ProofofResearch and the next by Cointelligence, investors have been growing concerned with HitBTC’s liquidity.

The research published by ProofofResearch on May 18 stated that the exchange had only 350 BTC remaining and that users are unable to withdraw their funds from the exchange’s accounts. Cointelligence highlighted that HitBTC had only 245.2 BTC valued at $3 million, along with some ETH in their wallet. The latter report also highlighted the exchange’s use of KYE as a “masquerade,” to “swindle funds on an indefinite basis.”

Bitwise, the crypto-asset management firm, added to HitBTC’s woes in their May 24 report, stating that the exchange’s volume was “almost entirely fake.” Accusing the exchange of engaging in “wash trading” employed in “small trade sizes,” the report evidenced the same by stating, among others, that the volume on the exchange did not follow the “real” exchange volume, hence concluding that it was not affected by larger industry movements.

Interestingly, the timeline of these events could not be more telling. CoinGecko, the market aggregator, released its “Trust Score,” less than two weeks ago with the objective of catching exchanges that “fake volume.” The company aims to provide a more wholesome approach to volume calculation by busing web-traffic and order book data.

CoinGecko stated that it would employ the use of Average Daily User Trading Volume [ADUTV] based on the median volume of 10 exchanges, as listed out by the March Bitwise report. Bobby Ong, CEO of the markets aggregator, stated at the time that exchanges will be monitored for “reasons of concerns,” and if any discrepancy is noticed, the “methodology will be altered.”

Since the announcement of “Trust Score”, three separate pieces of research have been released, one addressed specifically to the SEC, quite clearly stating that there are several concerns about the information presented by HitBTC and their trade volume.

It should be noted that HitBTC have since responded to the claims put forth by ProofofResearch, stating that “a subset of hot wallets” balances are not representative of exchange’s total assets. With regard to KYC concerns, the exchange stated that their area of focus will be on the protection of market participants and the elimination of bad actors.

Given the release of the Trust Score, followed by the barrage of accusations against HitBTC regarding their volume reporting, and withdrawal problems, the partnership with CoinGecko bears incredible importance. This partnership could be the exchange’s effort at mending incorrect ways or it may just be an attempt at blowing smoke to confuse the crowd.

The host of the Crypto Monsoon podcast, The Crypto Monk, didn’t buy the claims of the exchange coming clean and stated,

Coingecko later clarified that the association between the data aggregator and the exchange cannot be classified as a “partnership” and the same was “misrepresentation” by HitBTC, adding that the two did not “partner up.” The cooperation will seek to “gather more data” in order to improve “exchange transparency,” concluded Coingecko.

The official response from the market aggregators read,

“We had a phone call today with HitBTC exploring further ways to gather more data to improve our Trust Score methodology. Framing this as a partnership is a misrepresentation. We however look forward to cooperate with HitBTC in gathering more data to improve exchange transparency.”





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ErisX goes all hands on deck to launch a Bitcoin Futures market

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ErisX goes all-hands on deck to launch a Bitcoin Futures market
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ErisX’s CSO, Matt Trudeau, detailed the company’s four important plans for the future, which includes launching a spot market, to secure a Bit License, DCO, and to launch a futures market.

ErisX currently has a DCM contract, which is a Derivative Contract Market that allows ErisX to run a CFTC-regulated futures exchange. However, ErisX aims to get a DCO [Derivatives Organization], which will effectively allow it to run a CFTC-regulated clearinghouse. A clearinghouse would mean that ErisX can take control of the custody of the assets and clear and settled trades.

The CSO explained the benefit of this, stating,

“There is some efficiency for firms like producers [like mining companies]; if they need to hedge their inventory or need liquidity on a spot market, they could do that conveniently on a single platform. “

Trudeau added that from the “post-trade standpoint” and “the collateral management standpoint,” ErisX would have cash, crypto, and the futures, all stored in their clearinghouse. This would boost efficiency since it would be available for all customers under a single platform. The CSO added,

“… so there is some efficiency in terms of managing collateral, if you don’t have assets on  multiple platforms, it can all be in our clearinghouse.”

Apart from the aforementioned plans, Trudeau added that the crypto-industry needs to mature more and that ErisX plans to make a significant contribution to that. He added,

“The market is professionalizing and we think that in terms of what institutions are expecting from a trading/custody experience, we will bring some of the solutions to the market and that’s really the foundational pieces that they are looking in order to build their businesses on top of us.”

Apart from ErisX, LedgerX has also received a go-sign from the CFTC to settle Bitcoin Futures in Bitcoins. Other exchanges include Intercontinental Exchange’s Bakkt and Seed CX.





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