One exchange, the relatively unknown BitMax, has surprised crypto-watchers by accounting for more than half of the trading volume for Tether (USDT) during August, according to the latest CryptoCompare Exchange Review. Figures aggregated for its monthly overview of trading conditions threw up the surprising statistic, which casts a spotlight on the relatively small Singapore-based exchange.

CryptoCompare has long-questioned the effect of Transactional Fee mining – where traders are rewarded with native tokens, based on the size of their trades, for using a site’s markets – as having a skewing effect on cryptocurrency volumes. While CryptoCompare’s report makes no comment on the cause of the high USDT volumes on BitMax, this is not the first time that Bitmax’s USDT markets has raised eyebrows in this way, having shown similar characteristics during July too. 

Tether Dominance

USDT has dominated the stablecoin sector since its inception, with August seeing 71% of the all bitcoin trading volume being in pairs with it. However, it is its pairing with PAX and USDC on BitMax – which accounted for roughly half the amount of USDT that changed hand during the month – that is the outlier statistic for the month. 

It’s especially surprising that, during the period under review, USDT trading volume from Bitmax was predominantly in markets with two other stablecoins. While Tether’s peg with the US Dollar has infamously wobbled on several occasions in the last year or so, August did not see a clear example of the wider problems with Tether and Bitfinex having any effect on its value. Indeed, the price of Tether in relation to USDC and PAX never varied by more than half a cent during the period in question.

Screenshot 2019-09-18 at 11.37.49.png

This meant that arbitrage opportunities between the three we extremely limited. As the chart belows shows, compared to the amount of USDT changing hands in exchange for bitcoin and other crypto, the PAX and USDC markets on BitMax were huge. 

Screenshot 2019-09-20 at 12.32.45.png

Many would suspect that what is being seen here has the characteristics of wash trading by those looking to accrue the site’s own BTMX tokens in exchange for high volumes of transactions. Wash trading refers to traders simultaneously buying and selling the same asset.

There are many high-profile examples where it has also been used to generate fees for brokers, or rewards for traders. This hypothesis could be seen to be borne out by the less-than-organic looking nature of the volumes the site’s USDT/PAX market saw last month (see above chart, where the volumes come in distinct blocks). 

Ironically, the stable state of the stablecoin scene during the month, coupled with the rising value of BTMX, would contribute to good conditions for such activity, as there would be little risk of traders losing out in their deals compared to what they would gain in BTMX, which had peaked in value at around 0.13USDT towards the end of July. It is currently valued at just south of 0.09USDT.


A final wrinkle in the story comes with announcement from BitMax that it would be stopping trans-fee mining at the start of September, a move that was made on Sept.13th.


This immediately limited the supply of BTMX, meaning that whoever reaped the rewards of the trades during August has a better chance of their assets accruing value – used as they are to afford access to airdrops, and to pay the fees that the site has now begun to charge.


 You can read the full Exchange Review here, and see the online Exchange Benchmark dashboard here. 


The views and opinions expressed here do not reflect those of and do not constitute financial advice. Always do your own research.