The National Internet Finance Association of China (NIFA) has based cryptocurrency exchanges saying they fake trading volumes and promote safe-haven narratives to drive interest in cryptocurrencies.

In an analysis the NIFA published, foreign cryptocurrency exchanges use “programs to brush and tamper with data to create the illusion of prosperity in the virtual currency trading market.” Per the self-regulatory organization set up by the People’s Bank of China, crypto exchanges use “various gimmicks” to grab new users.

Cryptocurrency trading platform, the organization added, promote digital currencies as a “safe-haven asset beyond gold and silver,” but the narrative isn’t correct according to the organization.

As CryptoGlobe reported, researchers from Binance Research found that in the first quarter of the year bitcoin was “moderately” correlated to the S&P 500, with both falling significantly during said period. Gold and long-term treasuries, on the other hand, went up as investors took a risk-off approach.

Addressing crypto exchanges’ trading volumes, the Chinese watchdog wrote:

In our sampling analysis based on trading data from some of the exchanges, the daily trading turnover rate for more than 40 coins is over 100%, while more than 70 coins’ rate exceeds 50%. Despite the relatively low price and small market value, there have been massive trading volumes

Crypto market manipulation has long been discussed, with a report from Bitwise last year saying roughly 95% of all cryptocurrency trading volume in bitcoin is fake. Some exchanges have been known to use various tactics to incentivize trading in order to help their volumes grow.

In its analysis NIFA added some cryptocurrency exchange operators are “relatively hidden,” as their offices and business development areas are often different and consumers are unable to identify who runs an exchange. In its conclusion, the watchdog advised consumers to not engage in cryptocurrency trading.

Featured image via Pixabay.