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Can I Trust CoinMarketCap? Binance-Owned Crypto Aggregator Puts Money Over Accuracy

Last Updated November 2, 2023 9:10 AM
Teuta Franjkovic
Last Updated November 2, 2023 9:10 AM

Key Takeaways

  • DeFi platform Ergo criticized CoinMarketCap’s costly coin circulation data verification.
  • Ergo said much of CMC’s asset and exchange data may be obsolete due to the company’s costly verification process.
  • Multiple allegations of fraudulent activity have been associated with CoinMarketCap.
  • To safeguard your investments, it’s crucial to verify information from multiple sources.

CoinMarketCap, a cryptocurrency data aggregator owned by Binance, requires funds to update information about an asset on its website. However, its high pricing and fees for certain essential data services have led users of its service to accuse the aggregator of putting money over accuracy.

The DeFi platform Ergo has expressed dissatisfaction  with CoinMarketCap’s (CMC) $5,000 fee for updating data about the Ergo (ERG) token’s circulating supply. It also adds that CoinMarketCap’s six-step data vetting procedure is significantly more intricate than that of its competitor, CoinGecko, leading to less accuracy.

CoinMarketCap did not immediately respond to a request for comment.

CMC Criticized For High Verification Costs

CMC informed  Ergo that they required the information to generate an invoice for the requested update. A successful verification would incur a $5,000 fee before CMC proceeds with updating the circulating supply.

To rectify the information on the market supply of the coin, the Ergo blockchain platform team requested to contact the service administration.

A CoinMarketCap representative replied with a form that included a requirement to pay a $5,000 invoice, among other things.

Ergo questioned the veracity of the information supplied by the aggregator in light of this. CoinMarketCap has not yet provided an update on the circumstances.

CMC provides cryptocurrency information including prices, transaction volumes, and market capitalization. It was founded in 2013 by a programmer in New York. 2020 saw the site purchased by cryptocurrency exchange Binance  for an alleged $400 million sum.

CoinMarketCap’s rival, CoinGecko, born a year later, asserts  that it independently gathers and consolidates cryptocurrency data, offering an ad-free trading experience for a fee. The platform contends that its autonomous data aggregation and application programming interface (API) outperform the free APIs provided by exchanges.

This is because, even after verification, the price of an asset from an exchange will solely represent the activity within that exchange’s order book.

Airdrop Deception and Trade Volume Manipulation Claims

CoinMarketCap has been accused in multiple cases of fraudulent activity, such as airdrop fraud.

SaTT and TokenBot project  representatives accused CoinMarketCap in January of executing fictitious airdrops.

They assert that instead of distributing the resources meant to raise awareness about the initiatives to thousands of people, they went to a select few addresses. This raises the possibility of system manipulation. Consequently, their rate suffered as a result of the token sale.

With the airdrop of the TokenBot initiative, a similar tale emerged. 3,300 of the 4,000 token recipients finally moved their holdings to a single wallet. Representatives from CoinMarketCap pledged to look into the matter and get back to you with an updated list of project winners.

CMC was also accused of inflating trade volumes, meaning, numbers related to Bitcoin trading have been confirmed  to be inaccurate, which would result in an incorrect valuation of the cryptocurrency.

Aggregators like CoinMarketCap track the activity of selected cryptocurrencies, enabling investors to stay informed about sudden changes in their values.

Ironically, Binance also faced charges  of moving client money to company bank accounts to effectively avoid US regulations by leaving the US market. To operate independently for the US market, Binance established Binance.US. To get around federal scrutiny, Binance and Zhao received accusations of channeling US consumer payments to offshore accounts.

How to Be Safe Amid CMC’s Integrity Concerns

Giving false information has the potential to deter institutional and individual investors from adding to their stakes in the cryptocurrency space, which would lead to its collapse.

Many retail investors on CoinMarketCap have suffered significant losses due to errors listed on the platform and the company’s inadequate system for identifying and addressing questionable exchanges and fake volume.

The majority of cryptocurrency industry professionals now advise prospective investors to carefully consider the information provided by CoinMarketCap and to constantly double-check with additional sources.

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