Bithumb Introduces Korea's First Bicycle Trading Prevention System

Existing Orders Submitted by Members Are Protected

Bithumb announced on the 26th that it has introduced the country's first 'Wash Trading Prevention System.'

Wash trading refers to the act of a specific individual repeatedly buying and selling the same asset within a short period. In the virtual asset market, wash trading is prohibited because it can give the false impression that a particular coin or trading activity on a specific exchange is highly active.

To counter wash trading, Bithumb has established a new 'Wash Trading Prevention System.' While exchanges have traditionally monitored trading activity and taken measures to minimize wash trading, most have done so reactively. Bithumb has taken a step further by protecting existing orders submitted by members while proactively preventing the execution of additional orders that pose a wash trading risk.

Bithumb's wash trading prevention system targets Open API limit orders, where a large volume of buy and sell orders occur simultaneously. An Open API refers to a programming interface that publicly exposes specific functions within a service for everyone to use, enabling automated trading programs based on individual investment strategies to trade virtual assets.

The distinctive feature of Bithumb's wash trading prevention system is that it marks additional orders with wash trading risk among these API orders as 'order not allowed.' For example, if a specific individual holds an unexecuted sell (buy) order for Coin A and places a buy (sell) order for the same coin in an executable amount, the latter order will be marked as not allowed. By disallowing additional orders in areas prone to wash trading for the same account, the system can prevent wash trading occurrences in advance. Existing orders remain intact.

Manual orders and other non-API orders are monitored through an abnormal transaction monitoring system, and if deemed wash trading, measures such as warnings, alerts, and usage restrictions will be applied.

Lee Jae-won, CEO of Bithumb, stated, “To create a transparent virtual asset trading culture and environment, we have applied strengthened wash trading standards and introduced a system to prevent it proactively. As an exchange leading the protection of virtual asset users, we will do our utmost to prevent user damage and protect assets.”

This content was produced with the assistance of AI translation services.