I don't see any support levels. We are still in a solid downtrend after a year. Every single rally has been destroyed and we have solid negative trend lines that show it. I'm not sure how far it has to go down. 100? maybe lower. There isn't any technical reason for it to fail. The issue is that Bitcoins reputation is destroyed and most media outlets maintain the narrative. It has to drop out of the news for 6 months or more... But that is impossible because every time the price drops further, the news reports on it and laughs out how pitifully it has fallen. Bitcoin is giant social experiment. If no one believes in it, then it will die.
Poll: comparing to current bull market: what caused 2013's March and November bitcoin price booms to be so steep and fast?
I'm writing a new retrospective article on the potential impact the so called MtGox hidden trading bot had on historical price movements. Most importantly I seek to contrast the current, very progressive and stable, bull market to that/those of 2013 - which were sharp and fast. My argument here would suggest that MtGox's secret bot may well be behind this difference. As there is much uncertainty about the events & activities leading up to MtGox's demise, it's only best to gauge the community insight. Please answer the Twitter poll on the potential root-causes / differences between the 2013 and our current bull market. Alternative arguments are more than welcome in the comments.
Tether is the new MTGOX Willy bot. Any exchange that has Tethers is going to become insolvent and make you lose money, even if you don't own Tethers.
I have seen it said a few times recently, but I want to say this again. MTGOX manipulated prices. They were a "trusted" exchange that was at the time the biggest exchange. All caution was thrown to the wind when people used MTGOX because they saw arbitrage opportunities. Many of you may not have been around for this, but on MTGOX the price was regularly 100 USD or 200 USD higher than any other exchange for the Bitcoin price. They(the exchange itself) used a bot called Willy to manipulate the price upwards in their favor. The bot was credited with "money" that they "printed or generated" on their internal site, which nobody else could see. What is the difference between Willy bot and Tether? We can see Tether being generated. They are doing it out in the open and it "looks" above board. From the countless threads I have been reading here, it is clear that everytime Tether is printed and sent to an exchange(or 2 or 3 exchanges) the price of cryptocurrencies go up. This is unsustainable. MTGOX was unsustainable. I caution every single person to not have ANY of your funds on any exchange that has UDST on it. You might be thinking(incorrectly) that you are safe keeping money on an exchange, because hey "I don't have any of it in Tether" I only trade in the pairs of BTC or ETH!". Well, you would be wrong. When an exchange goes under what have they historically done? They issue tokens. When the FBI came in and raided BTC-E, what happened? EVERYONE who had coins was affected. The FBI took somewhere around 1/3 of all coins on the exchange. The exchange didn't give anyone 100% of their funds, instead they let you withdraw 65% of your funds at 100% and gave you tokens for the remaining 35%. The token price overtime is bought back and if you hold it until the end they promise to pay you back at 100%(I have 1 Ether token tied up in BTC-E, now called WEX). I know the pain, though small. What happens when Tethers become worth nothing? Every exchange who has USDT now has to write them off. Funny how that is going to work, writing off a token and they will then have to issue their own tokens to buy back customers funds. If you are holding any funds in HITBTC they use USDT, or BItfinex and others. If you have it in other places with USDT you should fully expect those Tethers to be worth 0 and the exchange having to issue everyone tokens. They will have to write off hundreds of millions of USD of Tethers, which will cause them to become insolvent. When they become insolvent they have to issue you tokens, just like BItfinex did, Just like BTC-E did. Hold your own funds, and if you want to trade coins between other coins use Shapeshift. You control your own wallet and private key with Jaxx app and Shapeshift is built in. That is just something I am reccomending based on my limited expeirence, if anyone has another thing that is better (maybe bitshares decentralized exchange?) feel free to let us know.
The Bitcoin Phony Rally of November 2013 has distorted the price for all of 2014. Here's how:
(1) Someone apparently infiltrated a leading but unsecure exchange by using a virus/bot that created fraudulent data in MySQL and PHP so that they could pretend to have, say, over a hundred million dollars in fake fiat. (2) They used this fake hundred million dollars to buy real bitcoins - spending, say, around 2 and half million fake dollars every few days, in over 40 buying sprees, to eventually scoop up around 270,000 real bitcoins over the course of a month. (Note: As most traders know, buying a lot all at once like this usually isn't smart - because it causes a lot of "slippage" - ie, everyone sees the buyer starting to buy, and so the price rises before the buyer is finished buying. But in this case, since the "dollars" being spent are fake anyways, the buyer doesn't care if they make the price rise due to "slippage". The dollars they're spending didn't come from their bank account, because with a few keystrokes, some knowledge of PHP and MySQL - and access to the servers in Tokyo hosting this unsecure exchange - they were able to "magically" invent over a hundred million fake dollars out of thin air. They don't even have to suffer the privacy invasions and indignity of KYC/AML either.) (3) Speculators around the world (especially the Chinese, who are said to enjoy speculating) got fooled by this phony price rise, making them think a major rally was underway. When they saw all this fake fiat being spent, they jumped on the bandwagon and spent their real fiat due to FOMO (fear of missing out). This made the so-called "price" on this unsecure exchange go sharply upward by a factor of 12x in just one month: from USD 100 to USD 1,200 in November 2013. Actually (due to the "no-arbitrage" principle of economics) the price went up around 12x on all markets around the world (including over-the-counter - OTC - and localbitcoins.com - LBC) because everyone (including the media) had fallen into the habit of using that leading but unsecure exchange (now secretly hosting a virus/bot) as their main pricing reference. (4) Now the fake buyer disappears with 270,000 BTC, bought using fake fiat. The market peaks and eventually does a "mean reversion" (dropping from USD 1200 back down its more typical trend-line around USD 300). And the unsecure exchange which they infiltrated eventually declares bankruptcy and goes out of business due to fraud / incompetence / malfeasance. (5) Now instead of everyone being excited and saying "Great, bitcoin went up 300% from USD 100 to USD 300 in just one year! Best investment of 2014!!" ... Instead, everyone's depressed and saying "Damn, bitcoin went down 75% from USD 1,200 to USD 300 in one year! Worst investment of 2014!!" Plus, a lot of people will be scared away by "volatility". OK, we have no hard evidence that anything like the above scenario actually did take place in November 2013. But we do at least have circumstantial evidence of the existence of such a virus/bot (called Willy Bot) on Mt Gox: https://willyreport.wordpress.com/2014/05/25/the-willy-report-proof-of-massive-fraudulent-trading-activity-at-mt-gox-and-how-it-has-affected-the-price-of-bitcoin/ So, what can we learn from this? People need to realize that all the "good" news of 2014 regarding infrastructure and momentum (VCs, vendor acceptance, consumer awareness, remittance - plus the ongoing stability of the Bitcoin network itself, for over 5 years now) has been overshadowed by one very major piece of bad news: We apparently let a virus/bot create an exciting but fake one-month 12x price spike of USD 100 to USD 1200 in November 2013... And now after that virus/bot has gone away, we're seeing a long and painful one-year 75% price drop from USD 1200 to USD 300 during 2014. Maybe people need to reject the possibly fraudulent fantasy that the price ever legitimately was USD 1200. Maybe the price never "really" was USD 1200. Maybe we just need to get over that fantasy. Why do we continue to base the "narrative", the "story" of bitcoin's price on this USD 1200 figure from a shady exchange which collapsed in scandal? - How do we know that "price" of USD 1200 wasn't just a figure of our collective imagination? People did hand over 270,000 Bitcoins - that we do know for a fact. But did they ever get USD 112 million in return? (Ask the people who got screwed over by Mt Gox. Remember how Mt Gox was famous in 2013 because you couldn't get your fiat out. Hmm... wonder why that was? Could it be... that the fiat you "had" was actually from the Willy Bot - so that fiat never existed?? Sounds pretty plausible.) Glass half-full or half-empty? It's quite possible a virus/bot created the illusion that the price went from USD 100 to USD 1200 in one month. (And we do know that many people who tried to ride this wave upwards got screwed later when it crashed.) Imagine if people had instead seen the price of bitcoin simply go up slowly but surely from USD 100 to USD 300 over the last 12 or 13 months. I bet a lot more Russians would be trying to move their devaluing rubles into bitcoin right now... if we were at 300 USD, up from 100 USD last year, instead of being at 300 USD, down from 1200 USD last year. The Willy Bot makes all the difference between saying "Bitcoin worse than Ruble in 2014" versus "Bitcoin better than Ruble in 2014". It all depends whether you think Bitcoin started from USD 100 - or from USD 1200 - around November and December of last year. So if this Mt Gox Willy Bot did indeed exist, then it seems like it has seriously injured the image of Bitcoin - and people's preference for it as an investment. It's going to take time - and honesty and education - to put this damaging delusion of the Bitcoin Phony Rally of November 2013 behind us. TL;DR - Someone apparently infected a major exchange with an "infinite fiat" virus to artificially pump the price up from USD 100 to USD 1200 in one month around November 2013. And then the price went back down from 1200 USD to USD 300 over the next year. Result: Instead of saying "the price went up 3x in 2014" (from USD 100 to USD 300) everyone has ben saying "the price went down 4x [ie, down 75%] in 2014" (from USD 1200 to USD 300). It's all relative. If you want a little more realism, maybe it's best to zoom out on the price chart - and ignore the Bitcoin Phony Rally of November 2013 - and focus on the steady rise from 100 to 300 USD, minus that totally fake-looking short-lived 12x blip.
The simplest explanation is usually the right one (Occam's Razor): "Willy" was not a conspiracy. It was exactly what Mark Karpeles said it was: a bot/API for high value clients.
I'm a little surprised that so many people are jumping straight to conspiracy theories in the last 48 hours following the "Willy Report". It especially surprises me because Willy follows the exact same patterns that so many people here have theorized would be done by "whales". Imagine you are a high value trader or company. You want to enter bitcoin or increase your position. Do you really think you would simply open up a regular trading account on MtGox, put millions of dollars into your web account, and start making million dollar trades? Absolutely no way. I've worked for two large Wall Street banks, and I can tell you flat out that high value clients have access to products and services that "normal" people do not. High value clients have dedicated staff to service them, they get taken out to dinners and events, they have exceptions done for them, they simply operate outside of the normal world that you and I live in. Willy didn't pay fees or fiat because it operated outside the purview of what a normal trader would have to do. High value clients would have direct relationships with MtGox, and would likely have special fee structure in place that they would pay to MtGox separately and at a different time than trades. Willy didn't back up trades with fiat because fiat was likely wired to MtGox separately, in bulk. Willy only bought because these high value clients weren't looking to really "trade". They were looking to enter the market, and likely couldn't find enough early adopters off-market to facilitate their needs. So, they had to go on-market. Second Market has publicly stated that they started having issues finding off-market individuals to buy from. What then? Just stop buying? Absolutely not. They instead needed to start coming on-market. However, you can't simply start making buy orders for several millions dollars. So instead, MtGox would offer an automated API that was directly connected to their servers (just like Mark said) and could make small buys at frequent intervals so as to try to not influence the market too much and cause the price to go skyrocketing. Willy had "??" in data fields because Willy likely facilitated several different clients at once. There is no grand conspiracy there. Again, I'm surprised that people aren't coming to these simple conclusions, especially since this is exactly how all of us have assumed "whales" work. What we're seeing in Willy is exactly what we expected to see in whales. Also, does anyone really think that Willy, a bot that was a small percentage of MtGox's volume, could really single-handedly incite an entire bubble when there were at least 2 or 3 other similarly sized exchanges? The truth is that Willy was just one form of high value clients entering the market on one exchange. Other exchanges likely have their own forms of "Willies" that contributed to the bubble just like it did on MtGox. And trust me, those "Willies" are no more conspiratorial than this MtGox Willy is.
Hi Bitcoiners! I’m back with the seventh monthly Bitcoin news recap. Last month's post got very little love, and I don't expect much more success with everyone focussing on August 1st, but here it is nonetheless. In my eyes definitely one of the most eventful months in Bitcoin's history, absolutely unreal how much happened:
SegWit activation imminent
Epic analysis of spam attacks & a 10M-user LN network
2013 price buble & Mt. Gox hack reveals
BTC-e went down
Bitcoin sign guy
Steepest rises and crashes USD-wise
To name a few. For those unfamiliar with the monthly recap, each day I pick out the most popularelevant/interesting stories in bitcoin and save them. At the end of the month I release them in one batch, to give you a quick (but not necessarily the best) overview of what happened in bitcoin over the past month. You can see recaps of the previous months on Bitcoinsnippets.com If you're on mobile and can't see the links below, check the web version. A recap of Bitcoin in July 2017
A collection of bitcointalk posts by Giancarlo Devasini
December 05, 2012 https://bitcointalk.org/index.php?topic=129080.msg1379928#msg1379928 Illiquid markets, such as Bitcoin are easy prey to manipulation. The principle is to draw attention by buying a pretty big quantity (compared to the daily number being bought and sold) and once this attention is drawn, more and more people will start buying trying to jump on the bandwagon and trying not to miss the train. This is on a larger scale exactly what happened in the summer of 2011 when the price of a BTC went all the way up to 30 USD a piece. Such phenomenons normally end up with a massive selloff, (exactly what happened in the above mentioned example when the price went down to 3 usd, losing about 90% of its value) where a lot of late joiners got burned, lost lots of money and abandoned the game saying it's rigged, when the only thing that was rigged was their intelligence. Rallies and inevitable subsequent bubble bursts aren't good for bitcoin. The movement we experienced in the last 2 days (about 7% up) isn't good for bitcoin. What we should need and hope for is a slow movement up, of about say 1-2% each week, due to a growing number of bitcoin adopters and to the fact that this adopters demand SLIGHTLY outpaces the number of bitcoins being sold by miners and people that accept payments in bitcoin but then need to translate those into fiat money. Everything else should be seen as a danger for bitcoin and not cheered as most people do. Rally is bad, not good! We all need to understand that or we will keep being a bunch of goofy beginners easy prey of speculators
June 13, 2013 https://bitcointalk.org/index.php?topic=229438.msg2463986#msg2463986 Oh yes? Any evidence you can show us about what you say or was it just a bunch of empty words? We were outed by whom? A resentful advisor that never understood the difference between being an employee and a shareholder and is lying thru his teeth? C'mon, let's move on.... You blame Bitfinex not to be responsible on a crappy mountain of false allegations. Would you define yourself responsible in doing that? It's your right to choose not to be our customer, just stop intentionally lying about us. Or could it be that, as you are running coinlenders.com you just want to throw some shit on your smarter competitors? Your business must be doing really poorly if you have enough time to waste on such childish techniques. Not very professional I must say.... Have a good life Giancarlo
November 13, 2013 https://bitcointalk.org/index.php?topic=229438.msg3564416#msg3564416 Dear Oda.krell I understand, having a unicorn as your avatar, you must be used to animals that actually crap jewels ( unicorns actually do that ). We at Bitfinex unfortunately haven't learnt how to do that yet. The only thing we know is how to transfer money every day to our Bitstamp account. We transfer big chunks of money and we do it every day. Due to the recent cost of Bitcoin it only takes 3k of volume to dry one million usd from our Bitstamp account, so normally in about one hour our Bistamp account is dry again. Then we have to wait another day for another wire to hit our Bitstamp account. Not much we can do about it, we still can't crap money, sorry about that. When the market goes up liquidity is low (that is everybody and his sister is fully invested in BTC) and this is the 238th time I explain this. My advice to use limit orders wasn't polemical, a limit order is actually the only effective way to avoid slippage and the fact that you call me unprofessional because I gave you an advice doesn't change things. Use limit order or accept slippage, there is no other way out. The Bitfinex dynamic is not easy to understand, I realize that. But to ask for supernatural things (such as to transfer money we don't physically have because our customers still have to wire it to us) it belongs to the world of unicorns, not to our world. The only thing I understand is that some people on this forum actually think before writing something, while some others just complain and throw false accusations without even realizing how things actually works. For example blaming the fact that we don't have enough BTC on Bitstamp to justify your loss just shows a complete lack of understanding of the trading mechanisms. The quantity of BTC on Bitstamp have NOTHING TO DO with a short liquidation. 8fold is actually one of the few that understands things and is always on spot with his comments (kudos to him). And by the way, I'm the only one having an italian name around here, only me not a bunch. And the fact that we are in Honk Kong where ANOTHER company closed down doesn't mean anything, does it? Or shall we say that any company located in Hong Kong or with at least an italian sounding named employee is doomed to go bankrupt? C'mon guys, give me a break! Having said that I think I'll leave this thread to Raphael, which is far more patient than me in taking your shit. I'm probably too old for that, I have to admit. Have a good day folks, I'm outta here. Giancarlo Bitfinex Team
March 08, 2014 https://bitcointalk.org/index.php?topic=229438.msg5591014#msg5591014 Let me try to understand what you think it is a valid proof of evidence.... Writing that some non specified "third party" audited our numbers and found nothing wrong with them is something what will re-assure you about our honesty? Don't you think that a statement like this is actually as good as the person writing it? But if the person that writes it is worth your trust, what sense does it make to ask him to state something like this? Maybe I'm trying to find a logic in something completely illogical (or I'm just really stupid) but I can't give a rational sense to a request like this. Finally if you had unanswered emails from support on important topics please PM them to me and I'll take care of it. Thank you and have a good day Giancarlo Bitfinex Team
March 09, 2014 https://bitcointalk.org/index.php?topic=229438.msg5602221#msg5602221 I understand logic can be taken for arrogance by people that are adverse to being logical. My post asked a very simple question: What does a statement like the following add to being more trustworthy? A third party (non specified) performed a check on our Bitcoins and found we actually have them. No additional details will be given. My point was that in order to trust a statement like this you must trust the source of the above statement. But if you trust the source ( whose statement doesn't add any proof of evidence into the equation ) then to ask for such a statement doesn't make sense. Call it arrogance, I call it logic. Have a good day Giancarlo Bitfinex Team
June 22, 2014 https://bitcointalk.org/index.php?topic=660948.msg7450158#msg7450158 Place your bet on the table and I'll explain anything you want. Then I will take your 10 BTC and give them to people that will cheer up to your stupidity. You are a kid that doesn't even know what he's talking about. If you don't like Bitfinex why do you keep trading on it, you retarded prick? As we had nothing better to do than stealing candies from retarded kids like you, you don't even have 3 btc (2.5 to be exact) in your pocket. Grow up and learn to take the blame of your own stupidity instead of insulting others. Just get a life. Giancarlo Bitfinex Team
June 22, 2014 https://bitcointalk.org/index.php?topic=660948.msg7450567#msg7450567 Your bitcoins are on the way. I have a reasonable explanation and offer you the possibility of making 100 btc in case I will be proven wrong. But in case you are just a douchebag full of hot air I want you to pay 10 btc, so that your ass will burn for while ( unfortunately I have no time to come and beat the shit out of your retarded brains ). From now on please stay away, you've got plenty of trading platforms to choose from, so don't waste our time anymore with your stupid childish theories. See you next life. Giancarlo Bitfinex Team
June 22, 2014 https://bitcointalk.org/index.php?topic=660948.msg7450573#msg7450573 Quote from: Dalmar on June 22, 2014, 12:58:08 PM LOL, I didn't know exchange owners browse this mainly trollish speculation forum. Giancarlo, Can you get a willy bot like Karpeles already and take us to 10,000? Currently working on it.... :-P Giancarlo Bitfinex Team
June 22, 2014 https://bitcointalk.org/index.php?topic=660948.msg7451007#msg7451007 Transparency doesn't mean to spend time in justifying ourselves against allegations that don't make sense. MatTheTwat is blaming Bitfinex because his stop order wasn't executed at the price he selected. Now even a 5 years old retard knows that a stop loss order is executed at the best price available in that given time. It is not our fault if other ask orders were pulled when the price started to go up. This is normal as several bots are programmed in such a way, i.e. withdraw orders when the price spikes up. To blame this on the platform, accusing people to deliberately steal 30 usd is not only a symptom of douchebagness, but also of the fact that his IQ is smaller than his shoe size. I can trace the guys that had the ask orders placed and pulled them off when the price started to raise. They can come on this thread and witness that nothing is wrong with this particular case. But as I said nobody does nothing for free and I want the Twat to be exposed to his own stupidity. He has a good opportunity to make a lot of coins if he's right ( he's not). But kids like him never make facts follow their words, they are just a whisper in the wind. Have a good day everybody, I'm off for a run Giancarlo Bitfinex Team
January 11, 2015 https://bitcointalk.org/index.php?topic=178336.msg10112539#msg10112539 Realcoin became Tether. You can find all the infos you need here: www.tether.to It's still in beta now, but it will soon launch. We as Bitfinex will adopt it and I believe a few other trading platforms will do the same ( Huobi, Okcoin etc.). Not sure about Bitstamp, but they probably will at the end if adoption goes well......
People are worried by Bitmain please remember Tether?
If tether and billions of FAKE USD was fraudulently used to pump the bitcoin price ( like the willy bot in mtgox ), wouldn't most of the bitcoin be bought by fake USD and thus owned by dishonest people? In fact this is a great way for governments to covertly harm crypto adoption. Create multiple fake accounts in legit exchanges, then fund them with government backed secretly printed digital fiat. So long has this printed money is going to crypto in the short term it will create a massive inflation of crypto prices relative to USD ( without devaluing the USD). They can also buy and sell between them selves once they own enough bitcoin.. Then the government will own alot of btc bought using fake money. Just as regular people are starting to cash out and new people are entering the market the government can deliberately crash the market. Also there is nothing stopping the government creating fake accounts on foreign exchanges. Making people lose faith in crypto is the best way to kill it, they wont try and ban traffic or stop people running nodes so small blocks and mining decentralization will do nothing to prevent an ECONOMIC attack. The only way that can be avoided is focusing of adoption and hyper bitcoinization, then we dont need exchanges.... PS, i dont think the US government try such a thing now, such an attack could be carried out by a dodgy exchange with the help of dishonest private companies.
TL/DR: A young man had a secret. To keep it hidden, he kept digging until the hole was a billion dollars deep. This is a speculative tale of a great bitcoin theft from MtGox in 2011 and the efforts that this man undertook to fix it. The tale explains the bitcoin bear market of 2011, the explosive rally of 2013, delayed fiat withdrawals, malled transactions, and a bot named Willy. “By the time you realize that real life has begun, you are already three moves in.”—Author unknown It was June 19, 2011. Mark, a 26 year-old young man—a boy really—was ecstatic. He had recently purchased MtGox—a small, online exchange for trading virtual tokens—and business was booming. These virtual tokens were called bitcoins and Mark loved them. Bitcoins were an obscure curiosity: a peer-to-peer electronic cash system that allowed users to store and exchange credits with any other user in the world, nearly instantly, and without the assistance of a third-party or the permission of an authority. All that was needed was a 78-digit secret number—a key if you will. In order for his customers to withdraw their bitcoins over the internet, MtGox stored some of these keys on its online server. The remaining keys were stored on USB drives and backed up on paper to prevent theft should the server be compromised. But theft was hardly a concern. In October of 2010, bitcoins were trading for $0.10 and the half a million bitcoins held by MtGox was worth only $50,000. But still Mark took precautions, diligently moving bitcoins to offline storage and leaving only what was necessary for customer withdrawals online. He truly wanted both his business and bitcoin to succeed. By April, the bitcoin price had risen to $1 and by June it had exploded to $30. Between June 1 and June 15, an additional one million bitcoins were sent to MtGox and immediately sold, crashing the price back to $10. It was a hectic time, with hundreds of customers needing help, visits from the FBI related to the Silk Road black market, and stress related to the recent market crash. Young Mark was becoming a victim of his own success: there simply wasn’t enough time to get everything done. On this very day in June 2011, the keys to the recently-deposited 1,000,000 BTC were still sitting on his server. Later this day, a group of hackers gained access to MtGox servers and executed fake trades that the world could see, driving the nominal price of bitcoin near $0. Mark was frantic. He quickly regained control of the servers and learned the dark truth: the million bitcoins that had recently flooded in earlier that month were gone. Mark admitted publically to the hack, rewound the false trades, but kept the truth of the missing coins a secret. How could this 26-year old explain to his customers that he had lost their bitcoins? And if the world found out, would this kill the thing he loved so dearly? Would he go to jail? Or worse yet, would someone kill him? Mark decided that he would do what he thought was right: he would slowly earn back the lost bitcoin with MtGox trading fee profits and eventually make his customers whole again. He still had over 500,000 BTC left—he moved 424242.42424242 BTC between bitcoin addresses and convinced the community that MtGox was solvent. As long as withdrawals didn’t exceed deposits over a long period of time, no one would ever find out the truth. Or so he thought. Meanwhile, the bitcoin thieves slowly mixed their coins with other coins, obfuscating the chain of ownership, and then re-selling these coins on MtGox using sock-puppet accounts. Mark tried to stop them, but there was no way he could know for sure which accounts were fraudulent—he even accused innocent people of bitcoin laundering. The constant selling of these stolen bitcoins drove the price down to $2 in November 2011. Mark faithfully used all of the MtGox profits to purchase coins back during this decline. But he would never use customer funds—that was a line he swore not to cross. The selling of these stolen bitcoins continued at a diminished rate over 2012, and Mark continually purchased coins using the MtGox trading fees. The bitcoin economy was growing and new exchanges were opening up across the world. His bitcoin reserves weren’t building fast enough but the price of bitcoin kept rising (along with the dollar value of the missing bitcoins). He was worried that other exchanges would suck coins out of Gox and reveal his secret. He decided he needed to take decisive action: for the first time, he used customer funds to purchase real bitcoins. These large purchases by Mark further increased demand and ignited the great rally of spring 2013 when the bitcoin price shot from $20 to $266. Mark had reduced his liability in bitcoins, but in dollar terms the coins that were still missing were worth more than ever before. On May 15, 2013 the US Department of Homeland Security seized millions of dollars from the MtGox Dwolla bank account. MtGox dollar reserves were already depleted at this point, and with the recent seizure, Mark could no longer make good on customer withdrawals in US dollars. Under the guise of “banking problems,” MtGox slowed US dollar withdrawals to a trickle in the summer of 2013. Customers became increasingly worried and began to bid up the price of bitcoin on MtGox, as this was the only way to escape with their funds. MtGox had little fiat and very little bitcoins, but it learned one thing: as the price differential between Gox and BitStamp grew, the outwards flow of bitcoin slowed dramatically. And so Willy was born. Willy was a bot, discovered by Wall Observers from bitcointalk.org and named by Opet on Bonavest's trading show, who would consistently purchased bitcoins at regular intervals between November 2013 and February 2014. Evidence that Willy belonged to Mark was revealed when both web and API trading at Gox was disabled for a brief period of time, exposing Willy as the only one left buying. Willy served two purposes: he drove the price of bitcoin on the MtGox exchange high, thereby slowing and sometimes reversing the outward flow of real BTC, and he reduced the number of GoxBTC held by clients. Of course, this meant that Willy eventually became the owner of a huge number of GoxBTC (that were of course no longer backed by real BTC). By December, the situation at MtGox was grim. In a desperate attempt to attract more funds, Mark offered reduced trading fees under the guise of celebrating their 1,000,000th customer. This partially worked, but Mark knew it was too late. If MtGox collapsed, it must appear that he didn’t know about the theft until now—for it was better to appear incompetent than criminal. It was time to cover his tracks. He purposely mixed immature coins into bitcoin withdrawals to delay the outward flow of coins, and later began malling his own transactions. He added the Gox malleability weakness not as a bug, but as a feature, so that it would seem plausible that outsiders had recently stolen the coins without his awareness. No coins were actually lost to malleability. The MtGox coin supply dwindled to 2,000 BTC and on February 7, 2014. He had no choice but to disable bitcoin withdrawals. The end was near. The problem Mark faced was that his customers had $150,000,000 credited to their accounts, yet the MtGox bank account only contained $38,000,000. He could blame the missing bitcoins on transaction malleability, but how could he explain where the fiat money went? He shifted Willy into reverse and cranked the throttle. Willy relentlessly dumped bitcoins into the open bids. The price fell further and further, eventually dropping well below the BitStamp price. But still not enough people were buying! He needed his customers to buy the GoxBTC. Willy kept dumping coins until finally the price dropped below $100. MtGox even acquired new USD bank wires from customers looking to purchase the cheap coins. By this time, the majority of Gox customers had converted their dollars into bitcoins. On February 28, 2014, Mt Gox filed for bankruptcy protection in Tokyo, reporting 6.5 billion yen in liabilities, 3.8 billion yen in assets, and 750,000 of customer bitcoins missing. Willy had failed to completely close the fiat solvency gap and Mark finally admitted to having lost the coins. Now we watch the rest of the story unfold. A story of how an oversight during a hectic period, an untimely theft, and an attempt to cover it up, lead to the greatest loss in the history of bitcoin. Cross-posted from: https://bitcointalk.org/index.php?topic=497289.0
Conspiracy Theorists: What are all the illegal or very shady things exchanges have done and gotten away with thus far?
Been casually reading up on the history of cryptocurrency exchanges, and stories like this one of the WillyBot at Mt. Gox I find really fascinating. It's piqued my interest to find out more about other (either confirmed or rumored) things exchanges have done. I know exchanges like HitBTC have been accused of withholding user's funds without explanation (and perhaps worse). But what about other things, perhaps shady growth tactics. Like for example, last NovembeDecember Kucoin really exploded onto the scene. Granted this was during the major bull-run of last year, but seemingly every new coin they were listing seemed to explode in price. Speculatively wondering how much of that was real, as opposed to Kucoin themselves buying up the asks of coins getting listed on their own exchange to pump the price, and entice more traders in turn to notice them and sign up. There's nothing in theory preventing them from doing that, correct? Alternatively, what's to stop exchanges from publishing fake volume data via their api for cmc to report to the rest of, and in turn encourage us to sign up chasing better coin liquidity. Is there anyway to confirm that? Maybe you guys know of other things exchanges have done and/or are doing, both confirmed or rumored. Would love to read more about this. Thanks in advance.
This post was once a section on my VPN post but I moved it to it's own post as it was nearly as long as the rest of the post together. Please see the VPN post for other VPNs I'd avoid, and recommendations on what VPN service to get. First and foremost, it's a US based service. This alone should be reason to avoid PIA, and I explain why in the VPN post.
Shortly after this, similar allegations started to be made about NordVPN. A copyright infringement lawsuit from Luminati (formerly HolaVPN) against Tesonet that claims
Prior to and separate from the technology at issue in this case, Hola provided a virtual private network (“VPN”) service called HolaVPN. Between November 2015 and June 2018, Hola, had a business relationship with Tesonet related to HolaVPN and Tesonet’s VPN service called NordVPN. … the OxyLabs residential proxy network is based upon numerous user devices, each of which is a client device identifiable over the Internet by an IP address… these user devices become part of the network through the execution of Tesonet code embedded in applications downloaded by that devices user.
Here they claim NordVPN is owned by Tesonet This Tesonet code "OxyLabs" is doing exactly what HolaVPN was accused of 3 years ago, using other users internet as part of their VPN service (essentially a botnet). Screenshots included in this case were taken by a "Caleb Chen", London Trust Media (PIAs parent company) employee. Again, thousands of Twitter and Reddit accounts have been created to spread this information. While this NordVPN accusation seems a lot more likely than the one against ProtonVPN, it is just an allegation at this point. Read more:
Mt Gox was originally a site to buy, sell and trade Magic the Gathering trading card in 2007. It's then owner, Jed McCaleb, decided to turn it into a Bitcoin exchange in 2010, and quickly got in over his head, selling the site to Mark Karpeles, who set to work rewriting the backend security. In June 2011, Mt Gox was hacked and ther equivalent of $8.75 million were stolen. Bitcoin enthusiasts Jesse Powell and Roger Ver, who helped the company respond to the hack, claim “Karpeles was strangely nonchalant about the crisis”. Later reports in 2013 showed Karpeles inability to run a company, or even develop software. There was no version controlling, any developer could overwrite any file, overwriting other developers code (for example, important security updates). Reverting to previous files would be near impossible, seeing what other developers have done to other sections of the code made difficult and manual. There was only one person allowed to review changes: Mark Karpeles. Sometimes essential security fixes would be left in his box for weeks before he could manually review them, leaving the markets users open to attack for all that time. At least that's better than their previous system of no review, where developers were free to upload, modify (or delete!) files on the live website, where users were subjected to untested software changes that often broke things. By fall 2013, Federal agents had taken $5 million from the company's U.S. bank account, as the company had not registered with the government as a money transmitter, and they were also being sued for $75 million by CoinLab. But it's okay, Mark Karpeles is… working on a $1 million Bitcoin cafe in the lobby, essentially just a hacked cash register in a cafe that never opened. In Feburary 2014, Mt Gox stopped paying out customers in Bitcoins, claiming a flaw in the digital currency. After some days of silence from the company, protesters turned up outside its offices, asking whether it was insolvent. As it turns out, hackers had been skimming the website for years, and had taken 850,000 bitcoins, more than $460 million at the time (and worth $5.5 billion at todays rates, 8th October 2018). He enlisted on his two friends Jesse Powell and Roger Ver to come help him sort it. They were scheduled to work through the weekend together, but Karpeles did not show up (with no notice). On the Monday, Karpeles spent the day stuffing letters, not aiding Powell and Ver in fixing his own company. Mark Karpeles later mysteriously found 200 thousand bitcoin that had “been forgotten about”. Yeah. Sure. Leaked trading records show an internal Mt Gox account (now dubbed “Willy bot”) was artifically inflating it's balance and would use this to buy Bitcoin whenever Mt Gox was running low. On August 1st 2015, Karpeles was arrested by Japanese police on suspicion of having accessed the exchange's computer system to falsify data on its outstanding balance. In 2016 he was released on bail but must remain in Japan, and is still currently on trial for Embezzlement and breach of trust. at which point PIA hired him as their CTO - the person in charge of all technical management. This isn't his first time in trouble, either. In 2013, Karpeles was indicted for a pair of fund transfers that took place in 2013: one that saw cash from a Mt. Gox customer be funneled into his personal account and another wherein an account in his name on the exchange had its balance mysteriously increased. London Trust Media (PIAs parent company) have hired Mark Karpeles to run their technical operations. The man that does not understand the most basic software development principles, has embedded many significant security flaws into his software that went upatched and “unnoticed” for years, and has shown himself to be imcompetant at managing his time and others. This man is now in charge of the system that has access to your entire internet traffic. “I am more than willing to give a second chance to Mark in this fight’s critical hour,” says Andrew Lee, cofounder and chairman of LTM. A second chance is working in an unrelated field until you can prove your techical abilities are up to the task at hand. Let alone the fact this isn't a second chance, with his two previous convictions.
OHCC Exchange Partnership and the fractional exchanges that support it. Your exchange may be counterfeiting cryptocurrency!
OHCC Exchange Partnership OHCC is the behind-the-scenes trading that goes on between the big three chinese exchanges - OKCoin, Huobi, and BTC China. Many of the players in this partnership deal with long/short loan trading and freely join their reserves via a trust agreement. The owners of these exchanges were unsatisfied with the meager income they earn from transaction fees, so they came up with a solution. During this current Chinese National holiday til the 8th of october, all banks are closed, this would be the perfect time to unleash the plan to the market.. They noticed that everytime favorable news came out, huge market moves would happen, so, the exchange owners would create counterfeit fiat on each exchange in order to foster optimism about the future market for the buyers on the exchange. Whenever the markets were to go bad, they would to do the opposite. In order to amplify downwards movement on the exchanges, “war bots” were created that push the markets down in an aggressive manner, causing margin calls and generating profit for their trading partners. http://i.imgur.com/9Q0xTet.png Employing traders with large fractional reserves, OHCC uses these fictitious funds in order to garner more real money deposits via leading recharge code sellers. In order to prevent the loss of the counterfeited currency, collusion between exchange owners must be done at the same moment. BTCChina decided that due to losses of funds in the past caused by bad encryption and bugs in the system, they needed to partner together and now think that the best hope to regain funds is to bring the price down to zero, in order to buy as much coin as possible and refill said reserves. Their counterparties in other exchanges agreed that they will aso use the same means, in order to collude and gain profits on their own reserve accounts. It is made to look that everyone is competing on the surface, but in private there is a mutual understanding within the industry that those who remain silent will receive the benefits of silence. Yesterday's Litecoin crash, combined between all the exchanges had turnovers as high as 20 million coins moved, way more than the sum of all the transactions made within the past week and the day before the transaction currency trading market volume closed at 35 million LTC, while the total LTC in circulation is only 31 million! This means that regardless of how much money you have to buy the dips, many will be put into the bottomless black hole. Public reserve is intended to ensure that the exchanges cannot fake these funds and ensure that that each is at 100 percent reserve, which is to have a completely open Bitcoin wallet address for both the cold and hot wallet, to ensure that they do not create counterfeited currency. Not open exchange reserves Yes, the above story is happening around us. Many players excessive dependence on trading platform, the coins stored in the platform, and trading platform does not fulfill its obligations disclosed reserves. Caused a trading platform for profit making counterfeit money to manipulate the market and malicious trick users into real money. So, how should users involved in this market protect themselves? 1) Do not store in Bitcoin and other platforms! If you're long-term bullish market, then Bitcoin, and Litecoin should be stored in their wallet. Some platforms will be committed borrowing interest, do not because of the platform for the petty and the coins and other bits on the platform, and finally you get the benefits far outweigh the losses! You just put the coins and other bits emerged, the trading platform will mention now facing pressure. Such power can be reduced more or less of them false. OpenBlock MultiBit 2) Use legal weapons to protect themselves, and urge the public to prepare gold trading platform. If you feel your rights have been infringed, the user should actively protect their legitimate rights and interests with legal weapons. False trading trading platform is an offense, the player must zero tolerance. 3) Vote with their feet, leaving no open exchange reserves, to publicly exchange reserves to deal. Now open reserve all transactions: chbtc 796 Futures has a open reserve for both hot and cold wallet as well as all member wallets Peatio No public exchange reserves should be open as soon as possible to prepare gold proved reserves include the number of hosted prove cold wallet address and user renminbi. You must ensure that the trader is not real money in exchange for false then the exchange of digital databases. The method proved reserves See: proof-of-solvency Ending OHCC Exchange http://i.imgur.com/njub1Nr.jpg The largest Bitcoin exchange MTGOX previously collapsed with bankruptcy and no funds for partners seem to be recoverable. With their collapse the crazy behavior of the Willy bot still vivid in our memories. So what will be the final outcome of OHCC exchange? Will OHCC Exchange will become the second MTGOX? To be honest, the editors do not know the fate of the players involved, as it is in their own hands.
Just thinking outloud here... Supposing Jihan's UAHF goes ahead... If we saw the market react like we did the DAO (GDAX/Coinbase announcement doesn't look promising for any initial support)... and Bitcoin Cash tanked and essentially went the way of ETC (some 100x price drop perhaps?)... then would mining become no longer profitable for Jihan when it's now $10-20 a coin? Given the economic majority appear to be with Core, we can assume core supporters would begin the initial (sell-off) exodus... Coinbase would also have the ability to cause significant turbulence (fair to say they kind of have the same 'red button' satoshi may/may not have with the 10%)... Can only assume that this would mean Jihan would eventually have to pull the plug on nearly all his Bitcoin Cash ASICS and divert mining power to the other chain if he wanted to stay in business... There'd also be a mass exodus from miners themselves from bitcoin.com etc. and any related mining pools (110% not much of an incentive for a coin now worth $10-20)... I think It's fair to say that the other 'side' are chiefly concerned with 'business' and 'stakeholder' interests as opposed to the transformative vision for the technology itself. As such, we can assume most people would only be invested in Bitcoin Cash for monetary reasons. Likely then, the biggest stakeholders would also take flight during the exodus. The only way for Jihan to stay afloat would be price manipulation and some kind of 'willy bot' to keep things stable; but this isn't tenable with no single point of exchange failure and all the best bots and coding brains seem to be on the other 'side' (unless Coinbase for some reason chose to keep things stable with their stash / coding skills). All this eventually leads to Core regaining majority hashrate support. Did I miss anything?
Hey, i just crossed over the Willybot article back from 2014 and i was wondering if something similar could be done today as well on chinese exchanges ? http://www.coindesk.com/bot-named-willy-did-mt-goxs-automated-trading-pump-bitcoin-price/ But what i don't understand is how is it even possible at all to manipulate a price upwards ? I mean you still have to find real buyers at some point so you wont be able to sell at all ? And since the volume is so huge on chinese exchanges with not just insiders trading but also regular people, how can you get over them? They will buy your shorts or sell your longs and if not, you won't make profit. So the only method i can think of right now is to trigger certain TA sell/buy points and do the exact opposite and push the price in the other direction again. But therefore you need a ton of money and even then, whats the problem with that ? This is just regular trading and if you risk a lot of money you should also be allowed to profit if you move was good. What are your experiences as a regular trader on chinese exchanges ? Anything odd happened to you ? How do these chinese exchanges make money at all btw ?
At its peak, the Willy bot was purportedly handling about 30 to 50% of trades on Mt. Gox, and spent over $100 million buying bitcoins on the exchange. This caused the price of bitcoin to surge over $1000 for the first time in bitcoin’s history in November 2013. The Bot’s Existence Had Been Rumored Since 2014 The Willy entity was also unaffected by Mt. Gox’s downtimes, continuing to buy between 10-20 BTC every 5-10min even at times when the exchange was non-functional to regular users, leading the ... The culprit goes by the name of Willy, and it is a bitcoin trading bot that only made an appearance on the Mt. Gox exchange. Willy first started its trading spree in September of 2013, eventually leading to the bitcoin price bubble and crash months after. The bot earned its name from Mt. Gox traders concerned that the exchange’s volumes at its peak were the result of fraudulent bot trading. A dedicated research piece dubbed the ‘Willy Report’ is still available, having appeared as an attempt to find out what was happening inside the exchange while it was still operational. Karpeles’ defense team also stated there had been hacks ... The even more disturbing fact about the two bots is that one of them, the Willy Bot was also used for stealing roughly 650,000 of Bitcoins from Mt. Gox in June 2011 and that the exchange owner Mark Karpales took huge effort to cover up the loss for several years, Express reported today.
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