$14 Billion: Crypto Exchange BitForex Hits Record Daily Trading Volume With Controversial Revenue Model

Francisco Memoria
  • A little-known cryptocurrency exchnage has recently hit a record daily trading volume of over $14 billion.
  • This as its using a controversial trading volume known as trans-fee mining.

Little-known cryptocurrency exchange BitForex recently made headlines after adopting the controversial trans-fee mining model, which helped its daily trading volume skyrocket to over $14 billion, with its most predominant pairs including Tether’s USDT.

The cryptocurrency exchange recently launched its BF token, which will be mineable through trading. This model, the trans-fee mining model, was first adopted by Chinese exchange FCoin which, at the time, hit a $5 billion daily trading volume with it.

According to CoinMarketCap data, trans-fee mining helped BitForex’s platform as its BTC/USDT trading volume alone is of $8 billion, over 8 times the trading volume of the world’s leading cryptocurrency exchanges Binance, Huobi, and OKEx.

BitForex itself was launched in June and is headquartered in Singapore, although its official registration points to the Republic of Seychelles. Its platform looks modern and asks for two-factor authentication (2FA) to let users trade.

On its website, the exchange claims the BF token’s total supply is going to be of 10 billion, and that token holders will get 80% of collected trading fees.

BitForex will give back 80% of its trading fees to BF holders. In the future, BF holders will have the right to participate in platform building major decisions and community management.

BitForex

The Controversial Revenue Model

The mining model has been adopted by various cryptocurrency exchanges, including Bit-Z, Singapore-based Coinbene, and ViaBTC-owned exchange CoinEx, which saw its trading volume surge 24,000% with it.

Trans-fee mining sees the exchange reward users with their own tokens to pay for trading fees whenever they trade, essentially making trading free on the platform. On top of that, most exchanges distribute part of their revenues as dividends to token holders, presumably in an attempt to raise their value.

The controversial model helps exchanges hit enormous trading volumes thanks to its feeless nature, allowing bad actors to wash trade funds to pump volume. Notably, wash trading is banned in regulated markets as it’s seen as market manipulation.

Moreover, the model attracts high-frequency traders looking to stock up on the exchange’s native token, to then profit off of the dividends they’ll receive from collected trading fees. Once most of the exchange’s native tokens are mined, high-frequency traders move on – FCoin’s trading volume, for example, has dropped to $355 million.

Trans-fee mining has been criticized by various prominent figures in the industry with Binance CEO Zhao Changpeng claiming it’s a disguised initial coin offering (ICO). At the time he said:

“If an exchange doesn't get revenue from transaction fees and solely profits from the price of its token. How would it survive without manipulating the token price? Are you sure you want to play against a price manipulator? The same price manipulator who controls the trading platform?"

Zhao Changpeng

Microsoft's Bing Reportedly Blocked Over 5 Million Cryptocurrency Ads Last Year

Francisco Memoria

Microsoft’s search engine Bing has reportedly blocked over 5 million cryptocurrency-related ads last year, as a result of a ban the search engine enacted in an attempt to protect its users from fraudsters.

According to Bing’s ad quality review, the company’s bad account takedowns doubled in 2018, with cryptocurrency, weapons, and third-party tech support scams being the main problems it faced. Overall, Bing suspended “nearly 200,000 accounts” last year, and removed 900 million ads from its platform.

As covered, Bing banned cryptocurrency-related ads back in May, in a move it claimed was made to protect users from scammers, as the crypto market being unregulated meant cryptocurrencies “present a possible elevated risk to our users with the potential for bad actors to participate in predatory behaviors, or otherwise scam consumers.”

At the time Melissa Alsoszatai-Petheo, who published the company’s blog post on the move, wrote:

To help protect our users from this risk, we have made the decision to disallow advertising for cryptocurrency, cryptocurrency related products, and un-regulated binary options. Bing Ads will implement this change to our financial product and services policy globally in June, with enforcement rolling out in late June to early July.

The move saw cryptocurrencies join other questionable products and services Microsoft banned from its platform. These include Ponzi and pyramid schemes, and the mentioned third-party tech support scams.

Bing notably banned cryptocurrency-related ads following bans enacted by search giant Google and social media giant Facebook. These two firms have since started allowing crypto-related ads from a few companies.

At the time, various cryptocurrency associations threatened lawsuits against the tech giants over what they claimed to be “cartel collusion” against cryptos, made in an attempt to manipulate the market.

Although Microsoft’s search engine has banned crypto ads, the tech giant itself has been accepting bitcoin payments since 2014. Its website even has a how-to page walking users through the process of topping up their accounts using BTC.