On Yavin, Founder and CEO of Cointelligence, and Alex Mashinsky, Founder and CEO of Celsius Network

On Yavin, Founder and CEO of Cointelligence, and Alex Mashinsky, Founder and CEO of Celsius Network, talk about how a scam exchange and Coinmarketcap’s methods could have damaged Celsius Network.

I had the pleasure interviewing Alex Mashinsky, Founder and CEO of Celsius Network, talk about how a scam exchange and Coinmarketcap’s methods could have damaged Celsius Network.

A short recap:

  • CEL token was listed on Bilaxy, an exchange that Celsius had never heard of or communicated with.
  • The token was listed with fake volume and an artificially lowered price.
  • Bilaxy is claiming to have 10x the volume of Liquid, but according to Alex, Liquid has 70-80% of the current CEL held in exchanges. There's simply not enough CEL in circulation for Bilaxy to have what they claim.
  • They also claim to have more volume than Binance, but my research shows they get 1/10th the traffic of Binance.
  • This fake volume and lowered price created artifical volatility on any aggregator which included Bilaxy in their API. Coinmarketcap and CoinGecko use Bilaxy's stats, for instance. In the video you will see a comparison between charts from CMC and from CoinPaprika, which does not include Bilaxy.
  • Exchanges like this tend to charge high deposit or withdrawal fees, if they allow people to withdraw their crypto at all. This behavior damages the reputation of crypto and causes newcomers to get discouraged and leave.
  • Celsius recommends that users always carefully research before signing up for an exchange or wallet. They have some trusted providers listed on their site Celsius.network but encourage users to always do their own due diligence as well.

Please see the video below:

The damage caused by scam exchanges

Alex and I share a mission to bring more people to cryptocurrency. Celsius aims to bring 100M new people to crypto, for instance.

The problem is, it's hard to get people to try crypto, and stick with it, when this is what they hear about in the news, or what they encounter when they decide to go buy some coins.

We see these same kinds of exchanges popping up over and over again, possibly run by the same people under a different name. They take advantage of people by offering high volume and low prices, only to charge them high fees, or disappear with their tokens.

We can call out scammers all we want, but there's little we can do to stop them entirely. As soon as enough people know that an exchange is a scam, they just close up shop and open under a new name.

And when these fake exchanges are picked up by aggregators like Coinmarketcap, it does more damage. When users of CEL, for example, see that CMC is showing volatility, it makes them concerned about the value of their crypto. They may consider selling based on this fake volume and price information. This is one reason why Celsius updates users with the current price, volume, and number of CEL users on a weekly and sometimes daily basis, so they can have an accurate accounting rather than relying on untrustworthy aggregators (this is not the first time we've encountered issues like this with CMC, as relayed in the video).

As always, the takeaway is to do your own due diligence. Be wary of exchanges offering high volume and low prices. And as a community, we need to continue to call out scams and help newcomers learn how to research exchanges before committing their assets.

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