AAX digital assets exchange, the only trading platform powered by the London Stock Exchange Group Technology’s matching engine has partnered with Solidus Labs, a New-York based provider of crypto market surveillance.
New sector, old tricks
Trading manipulation is one of the thorniest issues in the modern crypto exchange industry. According to the most reliable studies, 95% of cryptocurrency trading volume is subject to heavy manipulation.
The most widespread type of market manipulation involves highly sensitive instruments. 'Classic' market manipulation (wash trading, spoofing and pump-and-dump) is accompanied by crypto-specific techniques, such as cross-market manipulation, hack-and-trade, etc.
The critical level of vulnerability of crypto exchange services to trading manipulation has repeatedly been mentioned by regulators in their decisions regarding blockchain-based services. E.g. the NY State Department of Financial Services issued a special statement highlighting that:
VC Entities are required to implement measures designed to effectively detect, prevent, and respond to fraud, attempted fraud, and similar wrongdoing
This approach is common for financial regulators around the world in their ever-increasing efforts to regulate cryptocurrency segments. Hong Kong and Malaysia are two pioneering jurisdictions in this issue.
Problems and solutions
Addressing these sophisticated challenges, AAX, an HK-based institutional-level crypto exchange (member of London Stock Exchange Group’s Partner Platform) has inked a partnership with Solidus Labs, a crypto-native market surveillance vendor.
Within the framework of this collaboration, Solidus Labs will build a unified dashboard for holistic risk monitoring and increased operational efficiency. That said, AAX will advance its ability to detect, investigate and report all types of abusive trading behavior.
Thus, AAX's cutting-edge trading infrastructure will be enhanced with state-of-the-art compliance tools based on machine learning and SaaS principles tailored for digital assets.
Both partners see this agreement as extremely meaningful not only for AAX and Solidus Labs, but for progress in blockchain sector security as a whole.