Do cryptocurrency exchanges fake trading volumes? An empirical analysis of wash trading based on data mining

Jialan Chen, Dan Lin and Jiajing Wu

Physica A: Statistical Mechanics and its Applications, 2022, vol. 586, issue C

Abstract: Cryptocurrency exchanges, which act as a platform for cryptocurrency trading, play a vital role in the ever-growing cryptocurrency market. However, with the rapid development of this emerging market, some unethical phenomena including faking trading volume have also appeared in cryptocurrency exchanges. To this end, this paper proposes a data mining-based method based on off-chain data and on-chain transaction data to detect the exchanges that fake trading volume. In particular, we first collect off-chain data from the websites of five exchanges and the on-chain data provided by a blockchain browser, and then analyze them from two perspectives, including transaction number and transaction amount. The empirical results suggest that Huobi exchange fakes trading volume most obviously, while Binance trading is relatively the most honest. In addition, different exchanges adopt distinct counterfeiting strategies when creating wash trading.

Keywords: Cryptocurrency; Exchange; Data mining; Blockchain (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:586:y:2022:i:c:s0378437121006786

DOI: 10.1016/j.physa.2021.126405

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