While many US crypto exchanges are taking advantage of the latest bull run to improve in hopes of impressing institutional investors and regulators, China’s so-called “Big Three” centralized crypto exchanges (CEX) – Binance, Huobi and OKEx are hurling – each other mud.
The latest clapper is on a fake video purporting to show a single sales order of 21 million bitcoin at Binance on January 4th. The clip went viral last week on WeChat, a popular social media platform in China.
The video watched by CoinDesk claims that the price of Bitcoin took a hit after the order was completed. Screenshots in the chats of a WeChat group show that some users seem angry and accuse Binance of “market manipulation”.
The angry reactions ignored the fact that the number of 21 million alludes to the total amount of Bitcoin that will ever be mined sometime by 2140 (the total supply of Bitcoin is currently 18.6 million). So 21 million Bitcoin could clearly not be sold. Also, most major exchanges can track the bitcoin reserve data.
However, since we’re not thorough, CoinDesk confirmed with several on-chain data firms including CipherTrace and CryptoQuant that Binance had not received any orders of this size at the time the video is due to be viewed.
A Binance manager spoke about the video on WeChat, casting shadows on unnamed “competitors” who he claimed were behind the video.
The video “couldn’t be more fake,” wrote Yi He, Binance’s co-founder and chief marketing officer, in Chinese on WeChat. “I didn’t want to answer because I thought no one would believe it, but given how tough our competitors were to post it on every group chat, I just wanted to express my appreciation.”
At the time of going to press, Binance did not respond to CoinDesk’s requests for comments.
If you look at English language social media platforms, you think that the three China-made centralized crypto exchanges coexist in peace and harmony. However, a survey of Chinese-language platforms shows different dynamics. Screenshots of chats and public posts on WeChat and other popular Chinese social media platforms like Weibo reveal multiple disputes between the three exchanges over the past few years. This isn’t the first time Binance’s He has encountered executives from rivals OKEx and Huobi on social media.
Despite his allegations, both Huobi and OKEx declined responsibility for the recent incident. Ciara Sun, vice president of global business for Huobi Group, denied that Huobi was involved in “creating the video,” telling CoinDesk that the video “mistakenly” recorded a sell order on the Binance platform.
“As a global financial organization that adheres to both ethical and regulatory standards, we value honesty and transparency in our organization and do not rely on misleading marketing tactics that would undermine the trust of our community,” said Sun.
Likewise, OKEx CEO Jay Hao told CoinDesk that crypto exchanges are often victims of false allegations of “price manipulation.”
“Anyone who is familiar with this industry can immediately turn down a photo like this, but it is unfortunate that some investors still suffer from such unfounded and fictitious allegations,” said Hao.
It’s not just business, it’s personal
Normal business competition to win market share in China is only part of the tension between the three exchanges. Those tough feelings go back at least four years when then-CTO of OKCoin, Changpeng Zhao, and co-founder Yi He left what was then the largest Chinese crypto-to-fiat exchange to start Binance, according to Colin Wu, a Der in China resident crypto writer who previously worked in the country’s crypto mining industry.
Meanwhile, OKCoin, along with other China-based Bitcoin trading platforms, has ceased trading activities in the country and went to sea after Chinese regulators banned the first coin offering in late 2017. OKEx has worked as a standalone unit from parent company OK Group or OKCoin since 2017, a spokesman previously told CoinDesk. OKCoin is now a San Francisco-based crypto exchange run by Chief Executive Hong Fang.
Huobi joined the fight a little later, and friction between the three exchanges increased after each introduction of crypto derivatives. OKEx is currently the second largest futures exchange after Bitcoin Open Interest, followed by Binance and Huobi. (The CME is the largest thanks to growing interest from institutional investors in the US.)
Several sources, who agreed to speak anonymously on the matter due to close business relationships with the three exchanges, told CoinDesk that tricks and false information like the fake Binance video may increase as competition intensifies again. This, in turn, can lead to a great deal of “Fear, Uncertainty, and Doubt” (FUD) for retailers and investors in China, especially relatively new entrants.
“The video came out at a time when retail sentiment was peaking,” a source said. “When people are afraid of the top, they can easily get aroused by something like this.”
“No matter how much the cryptocurrency space has matured, there will always be outside prospects taking the chance to create FUD among traders,” said OKEx’s Hao.