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Digital Economy:
What will the global market get

Crypto-exchanges. Extortion and Manipulation

13 March 2018  |    726

Almost half of last year’s ICO projects failed, although ICOs have gathered almost 1 hundred and 4 million dollars. According to the Tokendata service, of the 9 hundred and 2 ICO projects in 2017, 46% of them failed, being 1 hundred and 42 closed before fundraising, and 2 hundred and 76 - after receiving funds.

The reasons for this scenario are many. Some experts mention the impossibility of listing tokens on large crypto-exchanges — most platforms only work with high prices, something "unbearable" for most ICOs. Market investors said that the lowest price limit for holding an ICO on an exchange starts at 50 thousand dollars, but can reach 1 million — depending on the trading platform’s size. Despite the high prices, listing, especially at large sites, is an important step for a successful ICO.

It is often in the crypto-exchanges that the success or failure of a project is determined, according to the head of the consulting company Swiss Fintech, Oliver Bussmann. It should also be noted that the influence of exchanges don’t apply only to ICOs. For example, not so long ago, the American crypto-exchange Coinbase was accused of internally manipulating Bitcoin Cash’s price, which led to an artificial price rise on that cryptocurrency.

Another manipulation method is faking trading volumes on some exchanges. This was stated by Sylvain Ribes, a crypto-trader who accused two large exchanges of fabricating up to 90% of trading indicators in order to reduce the price of certain cryptocurrencies.

Price fluctuation (caused by theft or manipulation), can bring beneficial consequences for some, and bad for others. The larger the stolen amount  from a exchange, the greater the impact will be on the prices. Striking examples are the Coincheck hack in January, and Bitfinex’s artificial inflation of Bitcoin prices through Tether tokens.

Obviously, when it comes to price fluctuations, big players are always interested in lower prices and high profit margins. Small, or individual investors, who own a hundredth or a thousandth of a crypto-token, can only observe the markets and possibly catch the best moments for buying or selling cryptos.

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