Trading Technologies, the Chicago-based firm, announced Tuesday a partnership with a group of cryptocurrency exchanges to stamp out manipulation on their platforms.
TT has not been a stranger to the crypto market, having previously partnered with Coinbase to allow professional clients to trade bitcoin futures and the underlying asset side-by-side on TT’s trading platform. Now, Coinfloor, a UK crypto exchange operator, will be using the firm’s so-called Score technology to monitor its markets for manipulation and other unusual activity. TT will allow traders on its platform to access the Coinfloor EX marketplace, the firm said.
In addition to catching behavior such as spoofing, TT’s machine learning tech will be able to adapt over time to squelch practices ranging from quote stuffing, a way to overwhelm a venue with orders, to washing trading, buying and selling simultaneously to give the impression of a deeper market. Outside of crypto, Score users include prop traders, brokers, hedge funds, and other financial-services firms.
The news comes as crypto exchanges are taking manipulation in their markets more seriously. As Business Insider previously reported, Coinbase is building out a platform meant to better monitor its markets.
Meanwhile, Gemini is using Nasdaq’s Smarts, a surveillance technology used across Wall Street, to identify unusual and potentially criminal trading behavior on its venue.
Manipulation in crypto markets has become a hot-topic. Notably, more than 50,000 trades on bitcoin exchange Kraken’s market raised red flags and large tether trades failed to affect pricing on the venue, a Bloomberg News report found. Kraken mocked the claims in the report in a blog post.
Elsewhere, academics at the University of Texas published a paper alleging that Tether was used last year to manipulate the price of bitcoin, propping up its run to $20,000 in December.
Trading Technologies chief executive officer Rick Lane said the partnership will help further draw in professional traders to the space.
“We anticipate Coinfloor’s use of TT Score to help ensure market integrity coupled with our forthcoming connection to the CoinfloorEX marketplace will drive additional market participation by institutional and professional traders,” Lane said.
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