A Cointelegraph investigation has found that some cryptocurrency platforms that report billions of dollars in daily trading volume on CoinMarketCap appear to have misled customers about holding certain cryptocurrency licenses.
Bitspay, a cryptocurrency exchange that reported $1.4 billion in daily trading volume on CoinMarketCap, claimed that it held an Estonian license and was regulated by it, but after Cointelegraph questioned the license, the company quickly removed the Reported false license information.
As of this writing, Bitspay is the fourth-largest cryptocurrency exchange in terms of daily trading volume on CoinMarketCap, behind platforms such as Binance, Bitforex, and Topcredit.
According to CoinMarketCap, Bitspay is an Estonia-based centralized exchange (CEX).The exchange launched in 2020 and is regulated by Estonian regulators under anti-money laundering and combating the financing of terrorism regulations (Bitspay’s page on CoinMarketCap) read.
Bitspay claims that the exchange is licensed and regulated by Estonia’s Financial Intelligence Unit (FIU). “Bitspay Limited is registered under the laws of the Republic of Estonia with registration number FVR000796”, the company point out On one of its domains, Bitspay.io, the information was immediately deleted until asked by Cointelegraph.
Cointelegraph contacted the Estonian Financial Intelligence Unit to report that Bitspay does not have any valid license in Estonia. “We conducted an investigation and the license number they previously published appears to refer to the Estonian company Globe Assets OÜ,” a spokesman for the Financial Intelligence Unit said in a statement on September 21. The license also has a shorter validity period. The license representative noted that it took more than a year from March 2019 to January 2020.
The FIU did not respond to additional questions about Bitspay’s legal status in Estonia.
Bitspay will display the above license information to visitors at least until September 18, 2023.The company subsequently Rename On September 21, its website changed from the briefly unavailable Bitspay.io to Bitspay.global, removing any information registered or regulated in Estonia.
As of this writing, Bitspay has yet to provide any information about its registration or licensing on its new website. The exchange also claims on its website that its daily trading volume reaches 65,249 Bitcoin (BTC), or $1.7 billion.Despite reporting so many trades, the exchange appears have No more than 400 Twitter subscribers and no more than 16,000 Telegram members channel.
Kelly Nova, explain Bitspay’s founder and CEO told Cointelegraph on its website that the exchange is applying for licenses in Estonia and the United Kingdom. “We had some copyright issues and that’s why we shut down the Bitspay.io domain,” he said. The executive did not respond to Cointelegraph’s request for more information about Bitspay’s founders or why the company previously claimed on its website to have an Estonian license.
Bitspay does not appear to be the only platform reporting significant trading volumes on CMC, but little is known about its license, founders or background. Exchanges such as Topcredit, which has a daily trading volume of $1.8 billion on CoinMarketCap, and Bika, which has a trading volume of $1.2 billion, were unwilling to discuss their backgrounds and founders with Cointelegraph.
“We have long recognized that self-reported data can be problematic, but APIs are the only viable source of data collection,” a CoinMarketCap spokesperson told Cointelegraph.
The representative also mentioned the site’s rating system, noting that platforms such as Bitspay, Topcredit or Bika have significantly lower ratings than major exchanges such as Binance, which has owned CoinMarketCap since April 2020. Be diligent, especially on low-scoring exchanges,” the spokesperson said, adding:
“We know our data is not infallible. Our role is that of an objective, comprehensive aggregator, not a regulator. (…) In short, leveraging our industry-leading experience, technology, validation methods and feedback cycle, CMC figures are as credible as possible(…)”
The spokesperson cited the cryptocurrency motto “Trust not, verify” and said it embodies the fundamental principles of cryptocurrency and blockchain technology.
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According to public announcements, Bitspay list July 2023 on CoinMarketCap. CoinMarketCap’s main competitor, CoinGecko, does not yet list the site, nor does Topcredit or Bika. Despite this difference, CoinGecko has significantly more spot exchanges than CoinMarketCap. At the time of writing, CoinGecko Checklist There are 784 exchanges in total, and CoinMarketCap Checklist Only 225.
Sites like CoinMarketCap are often criticized for providing inflated exchange trading volumes. In 2019, Bitwise Asset Management claimed that 95% of trading volume reported on unregulated exchanges on CoinMarketCap was essentially false or non-economic wash trades. Another survey conducted in 2019 by data analytics firm The Tie revealed that more than 86% of reported cryptocurrency trading volume appeared suspicious.
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