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Intelligence
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#Data Science

Stablecoin Volatility Analysis – BIS Variance Threshold

None of the stablecoins analyzed met the Variance Threshold (VT) that the difference in stablecoin/fiat value must not exceed 10bp of the value of the underlying fiat more than three times over a one-year period.

Inca Digital approached this report addressing the following requirements:

TVL inflation in lending protocols

The key metric in the DeFi ecosystem, TVL, can be faked by multiple transactions. A crypto whale can move its funds and single-handedly drive up TVL.

In November 2020, Inca’s Investigation Team noticed unusual transaction patterns occurring in Compound protocol on Ethereum. These unusual transactions potentially indicate crypto whales moving large amounts of DAI across the Compound protocol to drive up the key DeFi adoption indicator – TVL.

Anomalies in OKEx trading time distributions

Distinct surges in time-of-trade graphs indicate potential scheduled trading bots activity to obfuscate privacy coin laundering. Wash trading can also be a good explanation for such trading patterns.

While many exchanges have recently started to delist privacy coins, OKEx’s Monero (XMR) and ZCash (ZEC) markets remain active with abnormal trading patterns. XMR’s time of trade distribution on OKEx noticeably falls out of the common flow of activity observed on Binance and Huobi.

SENSO Token - Fake Trading Activity on Top Exchanges

SENSO token demonstrates suspiciously high and stable trade volume on Bittrex, KuCoin, and Poloniex. Observed trading patterns are consistent with wash trading.

SENSO token demonstrates suspiciously high and stable trade volume on Bittrex, KuCoin, and Poloniex. Observed trading patterns are consistent with wash trading.

Anomalous trades on Gate.io

Recent order size distribution on Gate.io deviates from other markets and contradicts Benford's law.

Spot market trades on Gate.io show signs of falsified numbers. Below are the distributions of leading, second, and third digits for the size of executed trades as compared to Benford’s law expected distributions. Evidence based on Benford’s law has been used by ACFE to discern naturally occurring statistical deviations from fraud.

Abnormal Trading Volumes on FTX

Suspicious trading volume spikes with low volatility hint at potential wash trading activity on FTX exchange.

Our investigation team constantly monitors abnormal activity happening on multiple market venues. The bar chart below highlights the anomalous bitcoin volumes traded on FTX in periods of low volatility. Of note are the readily identifiable peaks of 1 min trading volume that don’t significantly affect the price itself (the difference between open and close price).