Is Coinsuper a Scam? Or could this be an amazing investment opportunity?
A few days ago, a follower of mine with the handle Rocco sent me some details about an exchange called Coinsuper. A Hong Kong based crypto exchanged led by Karen Chen.
Chen is the former president of UBS China, and from past experience this is usually quite a good sign. After all, we have seen people like Mike Kayamori of Liquid.com (Qash) who also made the move from Asian banking markets (SoftBank) to create his own crypto exchange, and his exchanges native Qash token is firmly sitting within the top 100 ranked cryptos.
The question in my mind though, is whether this is a bullish sign that we should all be taking note of, or is it merely people nipping at the heels of Binance CEO Changpeng Zhao who has an estimated personal net worth in the billions thanks to his own cryptocurrency exchange.
Whatever the case may be, there’s certainly a lot of competition cropping up, and coinsuper is one that has piqued the interest of a lot of people, in particular with regards to their massive daily volume. At the point of writing this post it is an astonishing $168m. This is where things get interesting because the exchange has their own utility token used for fees similar to that of Kucoin’s KCS and the Binance BNB coin.
CEN, which stands for Coinsuper Ecosystem Network, currently sits on a tiny $1.46m market capitalisation, and this is where you have to ask the question:- “Is there more to their daily volume than meets the eye?”
Given that KCS has a $56m market cap and by comparison a tiny $6.8m daily volume, just how can an exchange with 25 X less daily volume have a market cap that is 38 times larger?
It all boils down to market makers however could it also be wash trading? Essentially this is where lots or micro transactions are being pushed back and forth. If you have ever seen one of those coin pushing machines at an amusement park that has the arms pushing the 10p coins backwards and forwards, it’s a little bit like that, but what exactly is the difference between market making and wash trading?
Well a market maker is typically a 3rd third party that is assuming a certain amount of risk each time, and therefore gaining on the spread. A basic example could look a little something like this. They buy something that is worth 10p, sell it at 11p and re-buy it at 9p over and over again. This creates a dense order book in an otherwise thin market, and the market maker profits from the spread. Nothing here is illegal, they are just a customer that is buying and selling over and over again.
Wash trading on the other hand, is where someone manipulates the price by simultaneously buying and selling the asset to either artificially increase the volume or to generate commission fees so that they can extract money from thin air.
The core difference boils down to the intention. One is to provide liquidity in order to maintain the books of a particular asset, the other is just an outright shitty practice that will end up leaving a customer with burnt fingers. However Coinsuper have stated in section 1.2.6 of their whitepaper that they aim to address the problem of liquidity, and this is generally done with market makers. So you have to ask yourself, would an exchange go through all of the effort of setting up a good crypto exchange (as to be honest, it’s quite user friendly and fills orders quickly) and then go and ruin their reputation instantly by wash trading?
Coinsuper is not just a crypto to crypto exchange either, but rather they are both this and also a fiat to crypto exchange that offers USD pairings. This fact alone says to me that it’s unlikely that wash trading is happening as regulators would have a field day. Not to mention that they state in section 2 of their whitepaper that they are subject to regular AML (anti money laundering) audits. Whilst it’s easy to point the finger and scream that coinsuper is mostly like a scam guilty of wash trading because it has a high daily volume and the utility token has a low market cap, a little common sense needs to be applied here. However this is the crypto wild west, so don’t rule anything out.
CEN Utility Token
So Why would a crypto exchange with such high volume have such a low market cap? Well I have news for you, as all is not as it may seem. In the Coinsuper whitepaper there is one elephant in room we can’t ignore, and that’s the total supply of coins listed at 1bn vs the current supply of $132m that dictates the current market cap of $1.46m. It turns out that Coinsuper will be unlocking 60m CEN tokens (20%) for their team each year over the next 4 years, and that means that a further 240m tokens will be added to the circulating supply by 2022.
This casts the low entry investment barrier in a very different light, as the circulating supply will increase to 372m. This alone makes the market cap more like $4m. All of a sudden, the potential of this investment is altered massively, but I would still say that a likely 300 – 400% return is still possible. I am basing this on the current market cap of another Asian exchange that has high volume, and that is Bibox who are sitting on a $16m market cap and report similar daily volumes.
In short $CEN, which you can buy exclusively at coinsuper.com seems to be a good buy price in the following ranges
>$0.04c to match that of Bibox/BIX 300% ROI
>$0.10c to match that of Liquid/QASH 1000% ROI
>$0.14c to match that of Kucoin/KCS 1400% ROI
>$0.25c to match that of Binance/BNB 2500% ROI
At a current rate of $0.01 per coin at the time of writing, $CEN has a potential ROI range of somewhere between 300% -2500% based on the performance of their competitors.
Personally I doubt that Coinsuper is wash trading, but I do believe they still have a long way to go before people will be flocking to them from other trusted exchanges. However I think that with a proven leader like Chen at the helm, we’re going to hear this name a lot in 2019 within the crypto space.
With regards to the trading experience you get at Coinsuper, I personally feel it’s better than Kucoin and as the selection of coins increases on their exchange it could even one day rival that of Binance, but as for now Binance is still king.
Click here to read the Coinsuper whitepaper