How Small, Unregulated Exchanges Are Raising the Numbers in Crypto Volumes Against All Odds

When people look into cryptocurrency exchanges, the first two names are almost always Binance and Coinbase. These two exchanges, after all, claim to have the lion’s share in transaction volume (Binance) and amount (Coinbase,) thus monopolizing the market.

Those claims aren’t lies – Binance is indeed the single exchange moving the most crypto tokens on any given month, while Coinbase indeed has the largest amount of transactions most of the time.

The detail these claims always seem to ignore is that neither of those exchange has 50% of their market. In fact, they’re nowhere near.

A fragmented market

It’s easy to believe those exchanges would be the ones processing the vast majority of transactions, considering they’re almost unanimously recommended. And to be fair, they are processing the vast majority of transactions and, as one would expect, the large, regulated exchanges do hold a vast majority of crypto traders and users.

But things change when we look into transaction amounts. While Binance can claim to be the single exchange with the largest traded volume, they can’t claim to have a majority of the market – in fact, they can’t even claim that the largest transactions are being made through them.

This is because, as per recent reports, for some reason the largest transactions aren’t taking place on Binance, or Coinbase, or Bittrex. They’re instead taking place in small, unregulated, often poorly rated exchanges. But why is this?

The seedy underbelly of crypto

There’s one reason that immediately comes to mind when considering these facts. Cryptocurrencies are a well-known method of sending and receiving crime-related payments, down to the point that dark web dealings basically require you to handle them. 

Bitcoin and other cryptocurrencies, after all, owe part of their relevance to these groups, who quickly adopted the tokens due to the anonymity they provide.

Perhaps a decade ago, when crypto exchanges were still young, dark web denizens wouldn’t have minded buying or selling their tokens on large exchanges. Back then cryptocurrencies were considered an absurdity by many, and governments weren’t even thinking of them.

Fast forward to today, and more and more exchanges are getting regulated. These regulations are problematic because they require users to provide legal identification. 

Also, while blockchain has been touted as secure and at times anonymous, it is actually possible to find out who owns a wallet if you have a transaction where they had to identify themselves.

And you have to identify yourself to conduct transactions on regulated exchanges.

Thus, it only makes sense that those actively looking to keep the government and law enforcement out of their dealings would gravitate towards unregulated places – trying to offload your ill-gotten bitcoin on Coinbase or eToro would likely end up with you being investigated sooner or later, after all.

While this is the most likely reason, there’s another thing we must consider: Exchanges themselves might be lying.

Untrustworthy exchanges might provide untrustworthy data

D-rated exchanges and the like are known by the community for providing less than desirable services and often lying about what they offer. There’s, after all, a reason they’re low-rated.

On top of that, these exchanges aren’t regulated. This means that not only aren’t transactions under these exchanges protected by law, but also there’s nobody auditing them and making sure their claims as to how many transactions they have or how much crypto they move are real.

This in turn means we only have the word of these exchanges, who are known for lying, to back up their claims, which works out to no back ups at all. In some cases, one could check thetransactions coming in and out of an exchange’s own wallets to try and guess how much they’re moving – but nobody can know for sure, as intra-exchange transactions aren’t reported.

Seedy exchanges are seedy for a reason, and one of the easiest ways to get people to sign up to them is convincing them your tiny exchange is actually huge. Faking transaction numbers and amounts, then, is a great idea.


There’s always a chance there’s some other reason that can explain this peculiarity in the market – however, these two are the most likely ones. Occam’s razor tells us we should always expect the simpler explanations to be true – and certainly in this case the simpler ones are illegal activity, which is known to use crypto, and outright lies.

As the market matures and unregulated exchanges are cracked down upon (it will happen in many countries,) the truth is likely to surface. For now, however, all we can do is guess as to why the market is shaped this way.


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