Crypto firm claiming $1.4B in trades on CMC flashes reportedly fake license data
A number of cryptocurrency platforms reporting billions of dollars in daily trades on CoinMarketCap appear to have been misleading their customers about holding certain crypto licenses, an investigation by Cointelegraph has found.
Bitspay, a crypto exchange that reports a $1.4 billion daily trading volume on CoinMarketCap, claimed it held a license in Estonia, and is regulated under Estonian law. However, after Cointelegraph reached out with questions about this license, the company swiftly erased its reportedly fake license data.
At the time of writing, Bitspay is the fourth-largest crypto exchange by daily trading volume on CoinMarketCap, following platforms like Binance, BitForex and Topcredit International.
According to Bitspay’s page on CoinMarketCap, it is a centralized exchange (CEX) based in Estonia. The exchange was launched in 2020 and claims to be regulated under the Estonian “Anti Money Laundering Counter-Terrorism Financing Act 2019,” which appears to be referring to the country’s Money Laundering and Terrorist Financing Prevention Act.
Bitspay also claimed it was licensed and regulated by Estonia’s Financial Intelligence Unit (FIU). “Bitspay Limited registered with the registration number FVR000796, under the Laws of the Republic of Estonia,” the firm stated on one of its domains, Bitspay.io, until it erased the information immediately following Cointelegraph’s inquiries.
Contacted by Cointelegraph, Estonia’s FIU reported that Bitspay didn’t hold any valid license in Estonia. “We took a look into it, and it seems that the license number which they have previously announced refers to an Estonian company, Globe Assets OÜ,” a spokesperson for the FIU said in a statement on Sept. 21. The license was also valid for less than a year, from March 2019 until January 2020, the representative noted.
The FIU didn’t respond to additional questions about Bitspay’s legal status in Estonia.
Bitspay was showing its website visitors information on the license mentioned above until at least Sept. 18, 2023. The firm subsequently rebranded its website from the briefly unavailable Bitspay.io to Bitspay.global on Sept. 21, removing all data about being registered or regulated in Estonia.
At the time of writing, Bitspay has not provided any information about its registration or license status on its new website. The exchange also claims on its website that its daily trading volume amounts to 65,249 Bitcoin (BTC), or $1.7 billion. However, the exchange appears only to have around 400 followers on X (formerly Twitter) and some 16,000 members on its Telegram channel.
Kelly Nova, who is said to be the founder and CEO of Bitspay, told Cointelegraph that the exchange is working on licenses in both Estonia and the United Kingdom. “We have some copyright issues, and that’s why we closed the Bitspay.io domain,” he said. The exec didn’t respond to Cointelegraph’s request for further information about Bitspay founders or why the firm previously claimed to have a license in Estonia on its website.
Bitspay appears to be far from the only platform reporting massive trading volumes on CoinMarketCap despite little being known about its licenses, founders or background. Exchanges like Topcredit, which reports $1.8 billion in daily trading volume on CoinMarketCap, and Bika, which reports $1.2 billion, have been unwilling to talk to Cointelegraph about their background and founders.
“We have long been aware that self-reported data can be problematic, but APIs are the only viable source for data collection,” a spokesperson for CoinMarketCap told Cointelegraph.
The representative also referred to the website’s scoring system, pointing out that platforms like Bitspay, Topcredit or Bika have a significantly lower score than major exchanges like Binance, which has owned CoinMarketCap since April 2020. “We always encourage our users to perform their own due diligence, especially with low-scoring exchanges,” the spokesperson said, adding:
“We know our data isn’t infallible. Our role is as an objective and comprehensive information aggregator, not a regulator. […] In short, CMC numbers are as credible as they can be, using our industry leading experience, technology, verification methodology and feedback loops […]”
The spokesperson cited the crypto adage “don’t trust, verify” and said it embodies a foundational principle of cryptocurrencies and blockchain technology.
Related: Hong Kong to list ‘suspicious’ crypto platforms in wake of JPEX scandal
According to a public announcement, Bitspay was listed on CoinMarketCap in July 2023. CoinMarketCap’s primary rival, CoinGecko, hasn’t listed this website, nor has it listed Topcredit or Bika. Despite this discrepancy, CoinGecko has significantly more spot exchanges listed than CoinMarketCap. At the time of writing, CoinGecko lists a total of 784 exchanges, while CoinMarketCap lists only 225.
Websites like CoinMarketCap have frequently been criticized for providing inflated exchange trading volumes. In 2019, Bitwise Asset Management claimed that 95% of volumes on unregulated exchanges reported on CoinMarketCap were fake or non-economic wash trading in nature. Another investigation by data analytics firm The TIE suggested in 2019 that more than 86% of reported crypto trading volume appeared suspicious.
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Politics
House of Lords under fire for dropping rule that once caught out cricket legend and historian
Campaigners have criticised a change to the rules around declarations of interest in the House of Lords as a “retrograde step” which will lead to a “significant loss of transparency”.
Since 2000, peers have had to register a list of “non-financial interests” – which includes declaring unpaid but often important roles like being a director, trustee, or chair of a company, think tank or charity.
But that requirement was dropped in April despite staff concerns.
Tom Brake, director of Unlock Democracy, and a former Liberal Democrat MP, wants to see the decision reversed.
“It’s a retrograde step,” he said. “I think we’ve got a significant loss of transparency and accountability and that is bad news for the public.
“More than 25 years ago, the Committee on Standards in Public Life identified that there was a need for peers to register non-financial interests because that could influence their decisions. I’m confused as to what’s happened in the last 25 years that now means this requirement can be scrapped.
“This process seems to be all about making matters simpler for peers, rather than what the code of conduct is supposed to do, which is to boost the public’s confidence.”
Westminster Accounts: Search for your MP
MPs and peers alike have long faced scrutiny over their interests outside Westminster. File pic
Rules were too ‘burdensome’, say peers
The change was part of an overhaul of the code of conduct which aimed to “shorten and clarify” the rules for peers.
The House of Lords Conduct Committee argued that updating non-financial interests was “disproportionately burdensome” with “minor and inadvertent errors” causing “large numbers of complaints”.
As a result, the register of Lords interests shrunk in size from 432 pages to 275.
MPs have a different code of conduct, which requires them to declare any formal unpaid positions or other non-financial interests which may be an influence.
A source told Sky News there is real concern among some Lords’ staff about the implications of the change.
Non-financial interest declarations have previously highlighted cases where a peer’s involvement in a think tank or lobbying group overlapped with a paid role.
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There are also examples where a peer’s non-financial interest declaration has prompted an investigation – revealing a financial interest which should have been declared instead.
In 2023, Lord Skidelsky was found to have breached the code after registering his role as chair of a charity’s trustees as a non-financial interest.
Lord Skidelsky. Pic: UK Parliament
The Commissioner for Standards investigated after questions were raised about the charity, the Centre for Global Studies.
He concluded that the charity – which was funded by two Russian businessmen – only existed to support Lord Skidelsky’s work, and had paid his staff’s salaries for over 12 years.
In 2021, Lord Botham – the England cricket legend – was found to have breached the code after registering a non-financial interest as an unpaid company director.
The company’s accounts subsequently revealed he and his wife had benefitted from a director’s loan of nearly £200,000. It was considered a minor breach and he apologised.
Former cricketer Lord Botham. File pic: PA
‘Follow the money’
Lord Eric Pickles, the former chair of the anti-corruption watchdog, the Advisory Committee on Business Appointments, believes focusing on financial interests makes the register more transparent.
“My view is always to follow the money. Everything else on a register is camouflage,” he said.
“Restricting the register to financial reward will give peers little wriggle room. I know this is counterintuitive, but the less there is on the register, the more scrutiny there will be on the crucial things.”
Lord Eric Pickles
‘I was shocked’
The SNP want the House of Lords to be scrapped, and has no peers of its own. Deputy Westminster leader Pete Wishart MP is deeply concerned by the changes.
“I was actually quite horrified and quite shocked,” he said.
“This is an institution that’s got no democratic accountability, it’s a job for life. If anything, members of the House of Lords should be regulated and judged by a higher standard than us in the House of Commons – and what’s happened is exactly the opposite.”
Public confidence in the Lords is already at a low ebb after the PPE controversy surrounding Baroness Michelle Mone, who took a leave of absence in 2022.
Michelle Mone attends the state opening of parliament in 2019. Pic: Reuters
The government has pledged to reform the House of Lords and is currently trying to push through a bill abolishing the 92 remaining hereditary peers, which will return to the House of Commons in September.
But just before recess the bill was amended in the Lords so that they can remain as members until retirement or death. It’s a change which is unlikely to be supported by MPs.
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MPs and peers alike have long faced scrutiny over their interests outside Westminster. File pic
A spokesperson for the House of Lords said: “Maintaining public confidence in the House of Lords is a key objective of the code of conduct. To ensure that, the code includes rigorous rules requiring the registration and declaration of all relevant financial interests held by members of the House of Lords.
“Public confidence relies, above all, on transparency over the financial interests that may influence members’ conduct. This change helps ensure the rules regarding registration of interests are understandable, enforceable and focused on the key areas of public concern.
“Members may still declare non-financial interests in debate, where they consider them directly relevant, to inform the House and wider public.
“The Conduct Committee is appointed to review the code of conduct, and it will continue to keep all issues under review. During its review of the code of conduct, the committee considered written evidence from both Unlock Democracy and Transparency International UK, among others.”
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