On Friday 31 October, CoinDesk announced that China-based exchange LakeBTC has been suspended from the Bitcoin Price Index.
CoinDesk noted that the reason for the suspension was “the third instance of faulty price data from LakeBTC”.
The suspension is for 30 days while CoinDesk reviews the data from the exchange.
LakeBTC said that the null bid and ask values were a result of attempt to fix the previous data fault, and that a negative spread resulted in the ticker reporting null values.
Nonetheless, CoinDesk went ahead with the suspension of LakeBTC and made the announcement online.
In light of the repeated price reporting errors from LakeBTC, the exchange will be suspended from inclusion in the CoinDesk BPI for 30 days.
CoinDesk will continue to collect LakeBTC price data and review it for errors over the 30-day suspension period, and will also begin a process of reviewing solutions to prevent similar problems from arising in future.
There has been some social media buzz suggesting that CoinDesk’s reporting on its decisions regarding the BPI was questionable journalistic ethics.
We have to admit that there seems to be a conflict of interest here. A trade publication like CoinDesk should not really be managing a financial index and reporting on the mechanics of managing it or decisions regarding that management.
One bitcoin currency observer noted that “LakeBTC has suffered material financial, reputation and other loss because of this.”
As the self-avowed “world leader in news, prices and information on bitcoin and other digital currencies”, there is little doubt that CoinDesk’s reporting of decision on BPI suspension could have done some damage to LakeBTC. We thus have to ask whether this could have been handled differently.
Ultimately, a bitcoin index should be independent of any one publication as ownership of the index by one publication undermines both the objectivity of the publication and the index.