Cryptocurrency & Blockchain

We Need to Expose Shady Exchanges


Seasoned crypto traders will be all too aware of dishonest practices employed by some exchanges. Some fake their volume, some indulge in a tad of insider trading while others are just straight up scams.

I have seen multiple exchanges popup out of nowhere and then disappear just as quickly. I have seen multiple exchanges get hacked due to their own incompetence, and I have seen a bucket load of good old-fashioned exit scams.

The one thing all of these events have in common? The average punter/crypto trader is the only person who loses out.

Time and time again I have been on cryptocurrency exchanges, such as AEX, and seen what is clearly fake volume. In the case of AEX, you can see this evidenced in their ENU/CNC market.

Why I am Sure it is Fake Volume

When I began writing this article on June 15th 2019, their statistics boasted a trading volume of over 92m ENU within this market (see below).

AEX Fake Volume

The ENU token has an estimated circulating supply of ~526m. This means, on June 19th 2019, AEX traded ~17% of the theoretical total supply of a widely unknown cryptocurrency.

A reason as to why this is so unbelievable rests in the fact that, at present, over 160m ENU is yet to be swapped from ERC20. Meaning the actual supply of main net ENU cannot be more than ~366m. This means, according to their statistics, AEX’s CNC to ENU market actually traded closer to 25% of ENU’s total supply.

But wait, there’s more. The Enumivo blockchain is a DPOS one using EOSIO. This means there must be tokens staked to vote for BPs. Those tokens are locked and can’t be moved for at least three days. This means they can’t possibly have been traded on the 19th.

A quick search of the enu.stake account shows there are currently over 198m ENU tokens staked for voting.

This brings our total supply of actual circulating ENU down to 168m. This means that AEX want you to believe that they traded over 54% on ENU’s liquid supply, in one day.

How can anyone believe that this is true?

When the Enumivo founder, Aiden Pearce, had this brought to his attention he reacted by antagonising the exchange via Twitter (see below).

Why This is Such an Issue

On the face of it all, it may seem pretty harmless for exchanges to fake volume. People fake YouTube views and Facebook fans all the time, why not do the same with trade volume?

Simply put, the way in which people are affected by it. Faking an artist or brand’s social presence drives up their traffic, but people do not go to gigs, or buy tops, expecting financial return. People who buy crypto do.

Anybody who buys a cryptocurrency, ultimately, wants to see their investment increase in value. Those who say they do not simply did not hear the question.

One of the most basic principles of economics is supply and demand: If there is a limited supply and a high demand the price will increase.

Everybody knows this and it seems that dishonest crypto exchanges are cashing in on this simple barometer of invest-ability.

The current crypto space is one which sees huge swings in price over night, especially in stagnant markets. This fact makes low volume markets unattractive to investors. The easiest way to attract them, evidently, is to follow the age old saying: fake it ’til you make it.

By faking such a huge volume the exchange gives the image of a stable market which is highly liquid. This impression will influence investors who otherwise may have avoided getting involved with a particular market.

Take Action

As with so many things in life, the best way to take action against a fraudulent entity it to avoid it completely.

AEX are not the only cryptocurrency exchange which fakes their volume. I would also expect that the ENU to CNC market isn’t their only faked market, either.

If you suspect an exchange is faking its volume, and there are numerous which do, then avoid them at all costs. We must unite as a community to protect the vulnerable.

Preventing falsified information is one of the main reasons blockchain tech is becoming so prevalent. Exchanges part-taking is providing fake data are making a mockery of it.

Love, peace and happiness.