Chinese Exchange Allegedly Faking Trading Volumes: It’s Time To regulate The Crypto Market!

A researcher claims to have proven that more than 90% of the trading volumes on Chinese exchange OkEx are fake. According to this research, a sell order of just $50,000 caused the volumes to drop drastically, yet this is an exchange that claims to have tens of millions of trading volumes every day.Even more shocking is the research’s findings that this situation is not unique to OkEx, but cuts most crypto exchanges. In essence, most of the daily trading volumes in the crypto market are fake. They are just there to create the impression that the market is liquid.

This research comes at a time when the crypto industry is grappling with a myriad of other issues, which are affecting investor confidence. Take for example the issue of hacking. In the recent past, cases of exchange hacks have been on the rise. While in some of the hacks such as that of Coincheck one; measures have been put in place to refund investors, there are times when investors haven’t been so lucky. Case in point is the Bitgrail hack, whereby the company admitted to not having enough funds to refund investors who lost their money.

Then ofcourse there is the issue of ICO scams and pump and dumps schemes. Investors have been losing money in projects that never materialize, and when they do, they turn out to be pump and dump schemes designed to defraud.

If the market continues on this trajectory, there is no doubt that it will collapse. It won’t collapse because the tech is bad, it will collapse because people will lose faith, and with that, demand will diminish. No one wants to put their money in a market where you are never sure if whatever you are investing in is legit, or it’s just another scam designed to rob you of your hard earned money.There is also the fact that if things continue this way, governments will take tough measures that will just kill the market. We all remember a few weeks ago when India out rightly banned cryptocurrencies.

So what’s the way forward if this industry were to survive? Well, the future lies in regulation! There is a need for the industry to self-regulate and for governments, to come up with measures that will bring sanity into this industry. You are probably wondering, how can a decentralized industry self-regulate? Well, that’s simple. The industry may be decentralized, but most of the volumes go through centralized exchanges. Therefore, these exchanges can come together and agree on what constitutes industry best practice, especially on the criteria for adding new coins to their platforms. This can go a long way in bringing some sanity into the industry.Governments too can come in, and create laws that foster the industry. There is some good news on this front. Japan has signaled that it would like cryptocurrencies and blockchain regulations discussed during the upcoming G20 summit. That’s a step in the right direction that could help put to an end the madness currently experienced in the crypto industry. The future is not so bad after all.