$250 Million In Fake Volume On Bithumb Generated Daily By Exploitative User

  • One user is reportedly responsible for generating $250 million in fake volume on crypto exchange Bithumb every day.
  • Bithumb has been offering 120% payback on all trading fees during a promotional period.
  • However, one user has been claiming all the maximum daily payback by trading $250 million in cryptocurrency at 11 AM every day.

Alex Krüger, an economist and crypto analyst, recently discovered that a user has been exploiting South Korea’s largest cryptocurrency exchange, Bithumb. Krüger tweeted on Sunday that there has been $250 million in “fake volume” being traded on Bithumb each day, starting precisely at 11 AM Korean standard time.

According to the Argentinian cryptocurrency trader, one particular user has been taking advantage of the Korean exchange since August 25th. Bithumb offers up to 120% payback on all trading fees paid by its users via airdrops on a “first come first served basis”, Krüger explained. The exchange’s daily limit for paybacks is 1 billion Korean wons (nearly $900,000).

Bithumb collects trading fees by charging 0.15% of the value of each trade on its platform. This allows users to receive 0.18% payback on all trades through the exchange because of their promotional offer (0.15 x 120% = 0.18% payback).

Wash Trading: "Entering Two Opposite Limit Orders"

Should a user decide to trade with themselves, they would receive twice as much in paybacks, or 0.36%. Through a small “tweet storm”, Krüger explained that this can be done through “wash trading” by “entering two opposite limit orders.” So, total fees charged for both traders (by the same user) would be 0.3%. After applying the 120% payback, it would yield a 0.36% rebate on all such types of trades.

Krüger noted that if a single user wants to collect the entire 1 billion Korean won rebate, they can do it through the type of wash trading just described. However, to conduct such a trade, which is illegal in most places, the user would have to trade 278 billion Korean won (KRW), which is about $250 million.

Krüger has observed that this is exactly what one user has been doing since the past week and he has been doing it every day. As a result of the user’s exploitative trading activity, Bithumb is experiencing $250 million worth of fake volume every 24 hours.

"First Come, First Served" Basis

Since the South Korean exchange offers the payback on a “first come, first served” basis each day, the abusive user has been trading the maximum $250 million at 11 AM Korean time every day. Krüger, who shared a chart to show the user’s daily trading pattern on Bithumb, wrote, “notice how 31K bitcoin (KRW 252 billion) are traded at exactly 11 AM. The remainder KRW 26 billion are traded in other coins.”

Wash Trading on BithumbWash Trading On Bithumb, Image Credit: Alex Krüger Via Twitter @Crypto_Macro

Krüger also commented that Bithumb had been running quite an “expensive marketing campaign.” After subtracting trading fees, wash traders could earn up to $150,000 daily and a total of $4.5 million during the exchange’s poorly planned promotional period.

As CryptoGlobe reported in August, Crypto Exchange Ranks (CER), a research group, found that several crypto exchanges had been manipulating trading volumes on their platforms. These exchanges included BitForex, CoinEx, and FCoin.

Rng Security Camera Hackers Start Demanding Bitcoin Payments From Victims

The owners of a Ring doorbell security camera in Texas have been targeted by a bitcoin extortion attempt, which they managed to thwart simply by removing the device’s batteries to shut it off. The case, nevertheless, shows Ring security camera hackers are now demanding cryptocurrency payments.

According to a report published by WFAA, spotted by Gizmodo, 28-year-old Tania Amador revealed her Ring security system was hacked by hackers looking to cash in on their access to the device, by demanding a ransom of 50 bitcoin, equivalent to around $360,000.

Speaking to WFAA Amador stated:

I was asleep and our Ring alarm was going off like an intruder had entered our home. Then we heard a voice coming from our camera.

The voice initially started claiming to be from Ring’s support team, notifying the homeowner her account had been terminated by a hacker. It soon added that if the didn’t pay the 50 bitcoin ransom, she would be terminated as well.

The situation appeared to turn worse for Amador and her partners, as the hackers managed to make it look like they were just outside her door after compromising the security camera, adding to the pressure of the situation. Their response was to reach the device and remove its batteries.

Without their batteries, the hijacked cameras simply went off and the bitcoin extortion attempt ended. Ring has notably been at the center of a controversy after various reports pf its doorbell cameras being hacked started emerging. A report by Motherboard showed that on hacking forums, software used to hack these devices is being sold for as little as $6.

This type of software is often sold on the dark web, where vendors even list Black Friday deals to appeal to their customers. Speaking to WFAA, a home security firm claimed that these security breaches were a result of third-party data breaches that include Ring account details, and not a security flaw within Ring’s security system itself.

Featured image via Unsplash.