The drop was swift: Prices for bitcoin and
dozens of other digital currencies on Jan. 8 fell sharply, lopping more than
$100 billion off their collective market value.
globe-rattling move can be traced to one address: An apartment in a new
residential building across the street from a local union headquarters in a
gentrifying section of Long Island City, Queens.
It is the workplace
of Brandon Chez, the 31-year-old computer programmer
behind coinmarketcap.com, a website that is a top source for data on
bitcoin and hundreds of other cryptocurrencies. Mr. Chez’s site, which went
live in 2013, has become one of the most heavily trafficked websites in the
heating up. On Thursday, Intercontinental Exchange Inc., the owner of the New
York Stock Exchange, announced a partnership to launch a bitcoin data feed for
Wall Street banks and traders. Independent sites including Onchainfx.com have
also popped up.
Meanwhile, Mr. Chez’s site is wielding unexpected impact. On
January 7, coinmarketcap.com decided to remove trading activity from South
Korean exchanges from its price-quote algorithms. The reason: prices there were
significantly and persistently higher than in other countries. To some, it
seemed the Korean trades were artificially inflating the price of bitcoin.
Without the South Korean bids and offers embedded in the
CoinMarketCap listings, prices on the site fell precipitously. The price
of the cryptocurrency XRP, for example, went from about $3.40 to $2.60 in one
Yet little is known about how the site operates. Because
Mr. Chez initially didn’t communicate the change, few if any outside the site
knew why it was happening. Traders tried to help each other on message boards
like Reddit and social media. Many were angry.
“This decision is really head scratching and irresponsible,”
said a user on Reddit with the name “vilnius2013.”
In a Jan. 10 email exchange with The Wall Street Journal, Mr.
Chez explained that coinmarketcap.com decided to make the change in its price
algorithm on the evening of Sunday Jan. 7, though it remains unclear specifically
when it went into effect.
By Monday morning, prices on his website for bitcoin, Ethereum, Ripple Inc.’s
XRP, and dozens of other cryptocurrencies suddenly were being quoted materially lower,
sometimes 15% or more.
At the time, some
pointed to the South Korean move to inspect large
commercial banks in the country on their use of cryptocurrencies.
Then, that Monday afternoon in New York, CoinMarketCap released
a statement on Twitter that it “excluded some Korean exchanges in price
calculations due to the extreme divergence in prices from the rest of the world
and limited arbitrage opportunity.”
Mr. Chez wrote in his email to the Journal that “a lot of users
were complaining about the inaccurate prices,” but he “didn’t realize how big
of an impact” the Korean exclusion would have.
“I think the market was already on a downturn at that point so
the timing was quite unfortunate,” he added.
The site “caused the market to crash,” Mati Greenspan, an
analyst at brokerage firm eToro, wrote in a client note. “For myself and all of
you reading, I propose that we boycott this website effective immediately.”
So far, that
message has been ignored. On Monday, coinmarketcap.com was ranked 117th
globally by Amazon’s website-ranking service, up from 142nd before the Korea
decision. Coinmarketcap.com also ranked higher than most U.S. news websites,
and even Alibaba.com , a
major Chinese retailer site that was ranked 174th globally.
That is quite a
feat for a company that doesn’t have a corporate office, nor any clear outlet
to the outside world save for a Twitter and Facebook account.
The website doesn’t disclose any company officials, nor does it provide any
contact beyond a general support email.
Part of the reason Mr. Chez’s site is surging in popularity
comes from the mad rally over the past year in cryptocurrencies beyond bitcoin,
often called “alt coins.” Coinmarketcap.com lists prices for more than
1,100 of them, from Ethereum, the second most valuable to something called
AppleCoin, which Monday had a market capitalization on the site of $23.
Mr. Chez, whose name has been listed in public records databases as owner of
the company, said in an email that “our goal was and still is to remain a
neutral and accurate source for the cryptocurrency community.” CoinMarketCap is
registered in New York as a limited liability company, with an address in Long
Island City, according to the databases.
On that location sits a seven-story, brown-brick apartment
building that was built within the last two years. Mr. Chez is listed as a
resident there. The same address is also listed on public records linked to
CoinMarketCap. Earlier this month, a person inside the apartment didn’t answer
the door, and Mr. Chez declined to be interviewed.
Bitcoin, the leading cryptocurrency, was created in 2009 as a
software program designed to run across a network of computers, but without any
central authority. As it grew, exchanges were formed online that brought
together buyers and sellers. Because all those exchanges operate independently,
prices can vary widely.
Coinmarketcap.com takes all that information and produces one
standard price quote, making it easier to track data across different
It generally avoids news stories and analysis. Instead, the site
focuses on data, tallying the overall market value of all cryptocurrencies and
publishing the percentage of the market made up by bitcoin.
After receiving a
bachelor’s degree in computer science from Rochester Institute of Technology in
2009, Mr. Chez worked atLockheed Martin and Mediabistro, which
runs a website for journalists, according to an earlier version of his LinkedIn
profile, which has since been altered. The same year that he
started coinmarketcap.com, he took a job as a software engineer at
Rocketrip, which helps companies manage business expenses. He left that job in
2015. Mediabistro confirmed his employment; Lockheed and Rocketrip didn’t
appears to make money by selling display advertising through Alphabet Inc.’s Google.
A form through which potential advertisers can sign up says there is a “$20,000
minimum order” for campaigns.
Click here for the original article from The Wall Street Journal.