Golden Finance reporter Jessy
On December 4, the RATS community reported that Gate had fake token data transactions after launching BRC-20 RATS. In the two hours from 21:00 to 23:00 on December 4, the RATS transaction volume on Gate exceeded 880 billion. However, the address marked as Gate by CoinCarp only held about 47 billion RATS (the total amount of RATS is 1 trillion).
Based on the huge disparity between trading volume and the RATS held by the Gate exchange, the community inferred that Gate was falsifying data to crash the market and profit from it.
In response to the community's questions, Gate officially responded that the phenomenon was due to the sharp fluctuations in the market that night and the problems in the trading strategies of some quantitative institutional users, and had nothing to do with the platform operation. At the same time, Gate also released a snapshot of 100% of the BRC20 token reserves.
A quantitative trader who used to work in an exchange told Golden Finance that he thought Gate’s response was to pass the buck. “External quantitative institutions can only provide high liquidity. It is impossible for them to improve the data, unless the proprietary team within the exchange is placing fake orders. It is normal for the market-making team within the exchange to place fake orders.”
In response to Gate’s behavior, a campaign to withdraw Gate tokens was launched in the RATS community, which had a flavor of “retail investors vs. Wall Street”.
Data fraud, retail investors resist
In the two hours from 21:00 to 23:00 on December 4, the price of RATS on the Gate platform fell by 10%. At this time, the trading volume of RATS in Gate was an unreasonable 880 billion. In comparison, the trading volume of Bitget, which is similar to Gate, was only 1.1 billion in those two hours.
The huge data disparity between the two undoubtedly makes people question whether Gate is suspected of data fraud. For an exchange, the most obvious benefit of falsifying transaction data is that it can buy spot goods from retail investors at a low price.
When retail investors trade on exchanges, they are actually just exchanging data. Exchanges can manipulate the data, such as using a large amount of fake buy data to raise the price of a coin, or a large amount of fake sell data to lower the price of a coin. By doing this, they can harvest the chips in the hands of retail investors at a lower price. Such operations are also common in exchanges where new coins are listed.
Data falsification that is too bizarre is easy to detect. For example, the obvious data falsification by Gate this time has aroused strong protests from the RATS community. Members of the RATS community, including some KoLs, called on the public to withdraw their tokens from Gate in the community and on social media. A vote was also launched in the community to have Gate delist RATS. Currently, more than 90% of the votes support delisting.
As for why they want to withdraw tokens and ask exchanges to remove RATS, the community believes that such operations by exchanges will lead to the death of a token and even the collapse of an ecosystem. Because exchanges continue to dump stocks and manipulate prices, people will lose confidence in tokens. The most important point about BRC 20 tokens is that they are fair and legal, without manipulation by the project party. Such operations by Gate are obviously contrary to the original intention of the BRC 20 ecosystem.
Amidst such a storm, there were reports that Gate was no longer able to withdraw money, but it was later confirmed that withdrawals on the Gate platform were still normal.
However, a quantitative trader who once worked in an exchange told Golden Finance that it is normal for exchanges to conduct volume manipulation. User X @hankwell8 said, "It is a common phenomenon for exchange robots to manipulate volume, and it is inaccurate to judge the data based on trading volume. BRC20 Eco-Gate has made a great contribution. Without volume manipulation, how can it attract large platforms to go online? The purpose of the exchange is to earn commissions, and large platforms are more likely to go online only when they see this huge volume of transactions."