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Problems from the world of centralized exchanges

Igor Grigorchenko

News editor

Jul 11, 2023 at 06:17

Another batch of news from the world of crypto. Today we are talking about exchanges, their manipulations and problems. We also talk about a strange project, Arkham, to deanomize the blockchain.

Manipulation on CEX exchanges

It has long been rumored among traders that many exchanges illegally make money by manipulating the local market on their exchange. A favorite technique for this is to create artificial conditions for mass liquidations of traders.

Here is a fresh example of an anomaly that was observed yesterday on the Poloniex exchange.

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As you can see on the chart, Ripple (XRP) briefly fell to zero (and quickly recovered) in trading on Poloniex. No similar effects were observed on other exchanges; the rate collapse was an unexplained anomaly of this particular exchange.

Let’s see what it means in real life trading. Such a sharp drop causes a wave of liquidations, besides often causing a slippage effect when stop-loss does not trigger. If a trader had a long position open, he is very likely to experience a liquidation of his deposit. 

Such incidents regularly occur on a wide variety of exchanges, and it is almost always difficult to reasonably explain the reason for them. If we assume that it is done maliciously by the exchange itself, it actually creates a short-term artificial fall of the market, transferring as a result of such inspired liquidations money to the accounts of insiders, who at that moment were in short positions.

Such episodes occur quite often, each time causing fierce disputes in the community and even attempts to sue (almost always unsuccessful). The issue of the honesty of CEX exchanges has long raised questions. In particular, one of the accusations against Binance by the US authorities is insider trading on its own exchange through a fake market maker. Earlier, the Bitfinex exchange was convicted in court of similar manipulations, but this is rather a rare exception; usually, it is hard to prove such manipulations.

The crisis of CEX exchanges continues

We already wrote last week that the number of addresses that send Bitcoins to exchanges has dropped dramatically. This is the biggest drop in BTC balance on exchanges in history.

This is both indicative of a crisis of confidence in the CEX as well as a growing trend of HODLs, where BTC holders are preparing for a long-term hold on the asset and leaving the market.

It is the hodlers that are commonly referred to as “strong hands”, neural networks, so visualize this invisible hand of the crypto market:

Investing in Blockchain Deanon

Yesterday, Arkham announced the imminent sale of their token on Binance Launchpad and the launch of an airdrop. What is Arkham? The scandalous project offers to trade identifying data to blockchain wallets; in fact, you can sell personal information about someone whose wallet you know (the Doxx-to-earn model).

The project itself writes about itself:

We built the Intel Exchange after noticing 2 trends:

  1. Significant demand for on-chain analysis from traders, investors, journalists, researchers & protocols.
  2. the growing number of talented on-chain sleuths who participate in our community every day.


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