Trading volume manipulation and competition among centralized crypto exchanges

72 Pages Posted: 12 Jan 2021 Last revised: 28 Nov 2022

See all articles by Dan Amiram

Dan Amiram

Tel Aviv University - Coller School of Management

Evgeny Lyandres

Tel Aviv University

Daniel Rabetti

National University of Singapore (NUS)

Date Written: March 14, 2020

Abstract

How competition affects manipulation by firms of information about important attributes of their products and how such information manipulation impacts firms' short-term and long-term performance are open empirical questions. We use a setting that is especially suitable for answering these questionscentralized crypto exchanges, on which information manipulation takes the form of inflated trading volume. We find that static and dynamic competition measures are positively associated with volume inflation, indicating that competition may lead to increased information manipulation. Exchanges that manipulate volume obtain short-run benefits but are punished in the long run, consistent with the tradeoff between short-lived increases in rents and future losses due to damaged reputation.

Keywords: Crypto exchanges, volume inflation, competition, information manipulation, regulation. JEL classification: G18, G23, L10, L13, L15

JEL Classification: G18, G23, L10, L13, L15

Suggested Citation

Amiram, Dan and Lyandres, Evgeny and Rabetti, Daniel, Trading volume manipulation and competition among centralized crypto exchanges (March 14, 2020). Available at SSRN: https://ssrn.com/abstract=3745617 or http://dx.doi.org/10.2139/ssrn.3745617

Dan Amiram

Tel Aviv University - Coller School of Management ( email )

Tel Aviv
Israel

Evgeny Lyandres (Contact Author)

Tel Aviv University ( email )

Ramat Aviv
Tel-Aviv, 6997801
Israel
6400241 (Fax)

Daniel Rabetti

National University of Singapore (NUS) ( email )

1E Kent Ridge Road
NUHS Tower Block Level 7
Singapore, 119228
Singapore

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