Hidden Manipulation in Crypto Copy Trading: Incentive Distortions and Traffic Rent-Seeking

Crypto copy trading platforms are exploiting ranking mechanisms to drive traffic and fees, creating incentive distortions and traffic rent-seeking. Major exchanges including Binance, OKX, Bybit and Bitget all employ ROI-focused leaderboards that push lead traders into high-risk, gambling-style strategies. Platforms highlight short-term profits while hiding drawdowns, floating losses and other critical risk metrics in a data black box. Tactics like multi-account selection, selective time windows and account resets further manipulate performance records. Algorithmic biases favor high-frequency or well-marketed traders, undermining genuine skill. This lack of transparency erodes user trust and sustainability in crypto copy trading. Some platforms have begun introducing Sharpe ratios and enhanced risk disclosure to rebalance incentives. The report calls for a transparent, fair ecosystem that shifts from traffic aggregation to value co-creation among exchanges, traders and followers.