One of the substantial worth propositions of Bitcoin (BTC) is that nobody can create extra of it other than its fastened provide. Nevertheless, an govt from a crypto trade made a daring declare that some exchanges can create and promote BTC that is solely of their system, not on the blockchain, to control the market.
In an interview with Cointelegraph, Serhii Zhdanov, the CEO of crypto trade Exmo, shared his beliefs that market manipulation continues to be prevalent within the digital asset area and gave an instance of the way it can occur.
Based on the chief, if anybody needed to dump the market, it’s potential to go to an offshore trade that doesn’t undergo monetary audits and ask for $100 million price of BTC, utilizing $10 million Tether (USDT) as collateral. He defined that:
“The trade simply provides these funds to the account, creating these Bitcoins solely of their system. They don’t exist on the Bitcoin blockchain. The shopper or inside market-making staff then sells these Bitcoins equal to $100 million dumping the Bitcoin value on all exchanges.”
To get their income, the market manipulators can then revenue from arbitrage in accordance with Zhdanov. “After the worth is down, they purchase the identical quantity of Bitcoin at a a lot lower cost and make a revenue,” he added.
The CEO stated that combating and stopping these potential occasions requires stronger regulatory insurance policies which might be as complete because the inventory market. Zhdanov highlighted that offshore exchanges should even be regulated in the identical method as tier one exchanges or have transactions between regulated and offshore exchanges be restricted. With this, the chief believes that the market shall be a greater place for buyers of all sizes.
Moreover, the chief identified that one of many limitations to mainstream crypto adoption is the concern over money laundering. According to the CEO, compliance and more comprehensive regulation will make these concerns go away. He said:
“Crypto is a new thing that evolves quickly, it’s highly similar to traditional investment vehicles in essence. Therefore, I think there are many things we can borrow from the stock market, where regulations have been tested over a longer time.”
Lastly, Zhdanov explained that at the moment, malicious entities like hackers are more attracted to targeting crypto slightly than banks due to holes in safety. The chief famous that safety can be a key to a broader digital asset adoption.