  Perpetual swaps are derivative contracts that allow traders to speculate on,
or hedge, the price movements of cryptocurrencies. Unlike futures contracts,
perpetual swaps have no settlement or expiration in the traditional sense. The
funding rate acts as the mechanism that tethers the perpetual swap to its
underlying with the help of arbitrageurs. Open interest, in the context of
perpetual swaps and derivative contracts in general, refers to the total number
of outstanding contracts at a given point in time. It is a critical metric in
derivatives markets as it can provide insight into market activity, sentiment
and overall liquidity. It also provides a way to estimate a lower bound on the
collateral required for every cryptocurrency market on an exchange. This
number, cumulated across all markets on the exchange in combination with proof
of reserves, can be used to gauge whether the exchange in question operates
with unsustainable levels of leverage, which could have solvency implications.
We find that open interest in Bitcoin perpetual swaps is systematically
misquoted by some of the largest derivatives exchanges; however, the degree
varies, with some exchanges reporting open interest that is wholly implausible
to others that seem to be delaying messages of forced trades, i.e.,
liquidations. We identify these incongruities by analyzing tick-by-tick data
for two time periods in $2023$ by connecting directly to seven of the most
liquid cryptocurrency derivatives exchanges.
