Crypto Exchanges Acting Out: A Growing Problem?

Crypto Exchanges Acting Out: A Growing Problem?

In the ever-maturing cryptoverse, many crypto exchanges still operate in the shadows. This dynamic naturally leads to less-than-savory activities in those exchanges that aren’t gunning toward regulation. New allegations of a nefarious listing proposal from an unnamed “top 30 exchange” in the space offers a potential glimpse into said “shadows.”

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‘Market Cap Management’

Roy Huang, co-founder of blockchain art asset network play FRESCO, has alleged that a “top 30 exchange” in the ecosystem approached his project with a series of unethical, manipulation-centric propositions regarding a potential FRES token listing.

Huang declined to specify which exchange authored the proposal. saying instead that such behavior is “prevalent in the industry.” The document, written in Chinese, lists out a series of avenues that the FRESCO project could take via the exchange in order to artificially curate the FRES token’s market cap. As Huang put it, the exchange was “openly asking our company to use trading bots to create fake volume with 0 transaction fees.”

For example, at one point the document reads:

“If you want to create market cap management, we will provide API and let your engineering team to customize the trading bot for your project.”

In response to this “industry problem,” Huang concluded the ecosystem needs a “self-regulatory organization” to help mitigate such activities. But, in a space where free market economics and blockchain tech are widely esteemed, many will say on the flip side that said organization would be redundant or prone to regulatory capture. Still, others yet will sympathize with Huang’s desire to resolutely tackle alleged market manipulators. Moreover, if the proposal is in fact real, one can’t help but wonder what other projects took the mystery exchange’s offer, or similar offers from other companies in the past.

Acting Out?

This year, several crypto exchanges have been involved in dramatic allegations.

In Huang’s above tweet, for example, he links to a March 2018 article by Sylvain Ribes in which Ribes alleged OKEx and other popular Chinese exchanges are creating large amounts of fake trade volume. As an aside, it’s important to note here that the listing proposal Huang detailed in his aforementioned tweet apparently couldn’t have been OKEx since the proposal solicited listing fees in bitcoin and ether while OKEx PR manager Mandy Lau noted in March that “There will be no listing fees for any tokens to be listed on OKEx.”


In April of this year, Verify (CRED) CEO Yazin Alirhayim laid out his case for not manipulative but incredibly unprofessional behavior that the exchange KuCoin demonstrated toward his project over the course of several weeks. The episode led to Verify severing ties with KuCoin, losing out on a non-refundable 5 bitcoin listing fee in the process. Alirhayim even alleged that the exchange “offered us 0.5 BTC to “not publish'” his remarks. On Twitter, KuCoin’s account has said “That discussion is only between KuCoin and the project team.”

Roy Huang has also recently called out excessive listing fees in the space, saying even Nasdaq charges less.

More than a few exchanges in the space then have picked up bad habits, to say the least. What comes of this in the fledgling cryptoverse is still up in the air. In the U.S., investigators may have already taken note.

What’s your take? How should misbehaving exchanges be approached? Let us know where you stand in the comments below. 

Images via Pixabay

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