Tether [USDT]’s volume should be seen as a ‘completely irrelevant metric’, says researcher


Tether [USDT] has been a topic that has been voraciously discussed across the board lately, with the Bitfinex-Tether scandal providing the ground for the controversy surrounding the stablecoin. Another controversial topic in the cryptocurrency industry was the issue of fake transaction volumes on many of the popular cryptocurrency exchanges.

The magnitude of the topic was so large that even Changpeng Zhao, the Chief Executive Officer [CEO] of Binance had raised red flags. This topic and Tether as a whole received another twist when Larry Cermack, the Director of Research at The Block, pointed out a few parameters when it came to the said volume. Cermak’s first tweet read:

“Can we please all admit that total USDT volume is a completely irrelevant metric? Just as total BTC/ETH/XRP volume. To show why I made a quick chart of what exchanges have the most Tether volume at the moment. How many of these have you guys even heard of? Maybe 10?”

The major exchanges in question were DOBI Exchange, BW, BitForex, OEX, CoinBene, IDAXm LAOKEN, Bit-Z, Bibox, and Coineal. According to The Block official, these exchanges did not just contain fake volumes, but were was illegitimately portraying 95 percent of the entire volume. Cermak further added:

“About 20% of USDT volume comes from OKEx DigiFinex, Huobi, HitBTC and ZB. These exchanges at least have “some” real volume but likely very very little as well. Based on my estimation, only about 5% of the total Tether volume is coming from exchanges that don’t fake the majority of the volume. And if I were to make an educated guess, at any given time, only a maximum of 15% of the total Tether volume is real.”

The ongoing issue had become such a major issue that CoinGecko even launched a feature called ‘Trust Score’ in a bid to combat fake trading volume by injecting liquidity using online traffic and order-book data. The data obtained from websites such as SimilarWeb was proposed to be used as it was much more difficult to fake web traffic statistics aggregated by third-party services.

Keeping in tandem with his research, Larry Cermak concluded that the exchanges which did not fake much volume included major players like Binance and Bitstamp, while exchanges like Huobi and HitBTC were branded as ‘likely fake but not the majority’.

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