Alex Krüger, an economist and crypto analyst, recently discovered that a user has been exploiting South Korea’s largest cryptocurrency exchange, Bithumb. Krüger tweeted on Sunday that there has been $250 million in “fake volume” being traded on Bithumb each day, starting precisely at 11 AM Korean standard time.

1/ There currently are USD 250 million of fake volume traded at Korean crypto exchange Bithumb, every day at 11AM Korean Time, since August/25. Tweetstorm covers the math behind it in simple terms. #washtrading illustrated. — Alex Krüger 🇦🇷 (@Crypto_Macro) September 2, 2018

According to the Argentinian cryptocurrency trader, one particular user has been taking advantage of the Korean exchange since August 25th. Bithumb offers up to 120% payback on all trading fees paid by its users via airdrops on a “first come first served basis”, Krüger explained. The exchange’s daily limit for paybacks is 1 billion Korean wons (nearly $900,000).

Bithumb collects trading fees by charging 0.15% of the value of each trade on its platform. This allows users to receive 0.18% payback on all trades through the exchange because of their promotional offer (0.15 x 120% = 0.18% payback).

Wash Trading: “Entering Two Opposite Limit Orders”

Should a user decide to trade with themselves, they would receive twice as much in paybacks, or 0.36%. Through a small “tweet storm”, Krüger explained that this can be done through “wash trading” by “entering two opposite limit orders.” So, total fees charged for both traders (by the same user) would be 0.3%. After applying the 120% payback, it would yield a 0.36% rebate on all such types of trades.

Krüger noted that if a single user wants to collect the entire 1 billion Korean won rebate, they can do it through the type of wash trading just described. However, to conduct such a trade, which is illegal in most places, the user would have to trade 278 billion Korean won (KRW), which is about $250 million.

Krüger has observed that this is exactly what one user has been doing since the past week and he has been doing it every day. As a result of the user’s exploitative trading activity, Bithumb is experiencing $250 million worth of fake volume every 24 hours.

“First Come, First Served” Basis

Since the South Korean exchange offers the payback on a “first come, first served” basis each day, the abusive user has been trading the maximum $250 million at 11 AM Korean time every day. Krüger, who shared a chart to show the user’s daily trading pattern on Bithumb, wrote, “notice how 31K bitcoin (KRW 252 billion) are traded at exactly 11 AM. The remainder KRW 26 billion are traded in other coins.”

Wash Trading On Bithumb, Image Credit: Alex Krüger Via Twitter @Crypto_Macro

Krüger also commented that Bithumb had been running quite an “expensive marketing campaign.” After subtracting trading fees, wash traders could earn up to $150,000 daily and a total of $4.5 million during the exchange’s poorly planned promotional period.

As CryptoGlobe reported in August, Crypto Exchange Ranks (CER), a research group, found that several crypto exchanges had been manipulating trading volumes on their platforms. These exchanges included BitForex, CoinEx, and FCoin.