Can exchanges create imaginary Bitcoin to dump value? Crypto platform exec solutions

One of essentially the most substantial worth propositions of Bitcoin (BTC) is that nobody can create extra of it other than its mounted provide. However, an government 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 govern the market. 

In an interview with Cointelegraph, Serhii Zhdanov, the CEO of crypto trade Exmo, shared his beliefs that market manipulation remains to be prevalent within the digital asset house and gave an instance of the way it can occur.

According to the chief, if anybody wished to dump the market, it’s potential to go to an offshore trade that doesn’t undergo monetary audits and ask for $100 million value of BTC, utilizing $10 million Tether (USDT) as collateral. He defined that:

“The exchange just adds these funds to the account, creating these Bitcoins only in their system. They do not exist on the Bitcoin blockchain. The client or internal market-making team then sells these Bitcoins equivalent to $100 million dumping the Bitcoin price on all exchanges.”

To get their income, the market manipulators can then revenue from arbitrage in keeping with Zhdanov. “After the price is down, they buy the same amount of Bitcoin at a much lower price and make a profit,” he added.

The CEO mentioned that combating and stopping these potential occasions requires stronger regulatory insurance policies which are 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 might be a greater place for traders of all sizes.

Related: Analyst claims that exchanges sell your Bitcoin, crypto trading platforms respond

Additionally, the chief identified that one of many boundaries 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 government famous that safety can also be a key to a broader digital asset adoption.