The elimination of certain transaction fees on the exchange Binance would be at the origin of a consequent increase in the volume of transactions on Friday, an event which however had a limited impact on the price. As a result, Binance CEO, Changpeng Zhao (CZ), announced measures to combat “wash trading” on the platform.
The spike in trading volume came the day a promotion on certain Bitcoin (BTC) spot trading fees went into effect on Binance.
The increase in volume can be seen on the charts of the exchange’s BTC/USDT trading pair. The chart also shows that the price closed the day around the $21,600 level, the same level as it opened:
The surge in trading volume was spotted by traders and Changpeng Zhao later admitted on Twitter that “this is due to zero fees and people trying to reach VIP levels.”
Zhao vowed to remove “wash trading” incentives, such as the ability to upgrade to elite status with the exchange, in the event that reaching required levels is tied to executing Bitcoin trades at zero cost.
The decision to eliminate these incentives was later confirmed by Binance, which said it was necessary to “ensure a fair trading environment for all users”.
Binance has nine different tiers for users, with lower trading fees for those trading higher volumes. A similar volume-based fee structure is used by most crypto exchanges.
And although the introduction of fee-free Bitcoin trading brings with it some challenges, users seem content with the current state of affairs. When asked by the CEO of Binance whether they “still want this option to remain available”, 65.9% of respondents in a Twitter poll answered “Yes”.
Wash trading is the term used when traders repeatedly buy and sell an asset to themselves. It is usually done to make the trading volume on an exchange or other platform appear higher than it really is.
Over the years, many crypto exchanges have been suspected of engaging in wash trading to help them rank high in various volume-related rankings. It was also widely used on some exchanges that paid users in tokens to trade.
Follow our affiliate links:
- To buy cryptocurrencies in the SEPA Zone, Europe and French citizensvisit Coinhouse
- To buy cryptocurrency in Canadavisit Bitbuy
- To generate interest with your bitcoinsgo to the BlockFi website
- To secure or store your cryptocurrenciesget Ledger or Trezor wallets
- To trade your cryptos anonymouslyinstall the NordVPN app
To invest in cryptocurrency mining or masternodes:
To accumulate coins while playing:
- In poker on the CoinPoker gaming platform
- To a global fantasy football on the Sorare platform
Stay informed with our free weekly newsletter and to our social networks: