Look what they say! ZOMG https://mtgox.com/press_release_20130412.htmlThere is no doubt that we are expecting a violent crash of Bitcoin after trading resumes, but we are confident that this Panic Sell will be temporarily and that Bitcoin will rise again. This claim can be recognized as promising of further high returns. http://www.sec.gov/answers/ponzi.htmA Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity. Bitcoin missed only one sign of financial pyramid: promises of high returns. And here is it! Congrats gox, well done. April 3rd Mt Gox statement -- 'I understand that many of you have a lot at stake here, but remember that Bitcoin, despite being designed to have its value increase over time, will always be the victim of people trying to abuse the system, or even the value of Bitcoin decreasing occasionally. These are not new phenomena and have been present since the beginning of time when humans first started trading'. Can you imagine a brokerage in the US being able to say that the underlying is 'designed to increase in value' or that it's value 'decreases occasionally'? They couldn't because it would be illegal. https://bitcointalk.org/index.php?topic=172944.msg1805765#msg1805765 |
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Sorry that was meant they are propping volume.
I think the concept behind this is to increase volatility and as such the frequency of trades. Once the trading volume has gone up to this levels it will take a while for it to come down, during which they will collect fees.
As for their reputation: It's not like we can catch them doing it, we can either believe their explanations or come up with something our own. Neither of which can be proved either way.
I've had my own theories, which I won't rehash. I've seen some very questionable pricing and volume action on Gox. An unregulated exchange certainly leaves the door wide open to the full range of shenanigans circa 1920 NYSE. |
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If you are sceptical become sceptical of the validity of the DDOS claim. This smells like a scapegoat to me.
The DDoS mythology is overblown....they use it as an excuse for any sell-off. |
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Is naked short selling really good?
It will only worsen the volatility of bitcoin.
Assume i would short sell 100 000 bitcoins i dont have at mt gox, the price would crash down to 10$ in a second with an average price of maybe 30$.
Some people would panic and sell their coins and drive the price even more down, i would buy back all coins with profit with an average of maybe 10$ and could also go long at those levels.
No naked shorting......the BTC would be borrowed from a prime lender just as it would be during a normal short position in stock market. Shorts & derivatives on any real scale are probably things that would require a mature market and only occur when/if there is more liquidity.....at this point we can barely handle long only positions.  Short selling reduces market volatility. http://whitepapers.stern.nyu.edu/summaries/ch12.html |
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Interesting timing of Winklevoss news. I suspect the media may get back into the pump game very soon.
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Based on my experience of 20+ years trading countless billions in the real world:
1. Sort your trading code out.
2. Invest in hardware or hosting, you're making thousands or tens of thousands per day. Buy or hire a room full of the best machines you can (I'm not a tech expert). You can never go down through 'excess trading demand' - this is amateur.
3. Create a minimum trading size, the tiny bot trades of $1 are swamping the system and add nothing.
4. Forget about circuit breakers or 'cooling off', this only works when assets are only traded on only one exchange (ie NYSE/Nasdaq) which is why you do not see gold or Forex stop trading. The market continues and your customers are left helpless.
5. Get someone to be a market-maker. You need a pool of money acting as market maker, to provide some depth of liquidity to stabilise the price when the market volumes become very illiquid or erratic. Confidence is everything in this market.
6. Prove you have some depth to your security. Right now people have millions invested in exchanges and any number of them could be complete shams designed to take coins that cannot be traced. I could setup a good looking exchange in days, collect coins and money and then disappear, it's been done before, it could be done again.
Thanks for the recent 24 hours though, I doubled my coins at no cost........
I'll add.... 7. Provide easy mechanism for short positions (actual short positions, not simply staying in fiat). 8. Expand derivatives markets. |
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Everyone keeps talking about decentralized exchanges. Sorry if this is a dum dum head question...but where will the dollars be stored?
In your pocket or bank account. Not in MtGox's account. There would need to be a custodian to handle and arrange settlement. |
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Are you a former futures/commodities/FOREX trader? I know the space.
I worked for one of the biggest Wall Street firms and others. I don't want to name markets or firms, but I did deals in FX/equity/rate derivatives and others. I still have many friends who work for the usual suspects on Wall Street. I am now working in an offshore financial center. I have experience in managed futures, equities, forex, private equity. I am not a professional trader, although I dabble in equities. I agree, they really shouldn't have circuit breakers. I was beginning to think that this lag was a half-hearted attempt at trading curbs during sell-offs. No, I think they simply have a very bad platform that gets jammed up by bot trades.....probably much less nefarious than I had originally thought. My interest in BTC is that it is non-correlated (if ever anything was). The systematic risk makes it a very tough sell.....a non-starter really. The liquidity isn't quite there yet but I guess that will come. They really need infrastructure......separate the exchange and the brokerages IMO. Or, get a real firm involved. |
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Everything is going... According to plan I'm a happy bear! Are you surprised by the swiftness of the down move? What are the implications of such a speedy down wave on future waves? This is exactly what I expected. IMo This was a classic bubble, a speculative fifth wave/ending move. Not a third wave with strongly improving fundamentals. I think pretty much the whole thing will be retraced So yeah I'm as bearish as Proudhon these days... Great call. |
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While I'm far from accusing anyone of bad intentions, it's hard not to see that they probably liked the recent events:  Even if all trades had only 0.3% fee, they've earned more than 700K USD last week only (12M volume as seen on the chart above). Compare that to 150-200K they've earned in January and you'll see that they probably want the price to go sky high. Yes. |
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Its at $101.90 right now, so server is about to shut down again?
I believe it is. Is this the fourth time they will have stopped and restarted this thing after it started falling? I've lost track. They restarted once after my last post.... |
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Mt Gox seems to want to keep this at 3 digits. It looks like they will halt this over and over and walk it back up if necessary......I don't think they will accept 2 digits.
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Victims of their own success, again.
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This is the second time they've restarted us much higher than where we stopped. And we're headed back down....and of course, when we start going down we lag. Are they going the shut this off again because we aren't going in the right direction?
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They could make enormous profit if the rigged the buy sell offers. Because of 5 min lag! They get 2 market orders, 1 bid and 1 sell. They execute bid for high, they execute bid for sell. They profit off the spread with no risk.
That's called "front running". Gox is essentially an unregulated exchange circa 1920. IMO Bids/asks are mismatched to the point of malfeasance (or worse) during these lags. Churning, front running, wash trades, etc?? |
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I'm so sorry I'm late for our anniversary dinner, honey. I was DDoSed on the way over here.
I will start incorporating the DDoS excuse into everyday situations. If it's good for Gox....it's good for me.
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Is this the success lag? The panic sell lag? The DDoS lag? Or, the market manipulator lag?
The DDoS lag? Same lag, different excuse.
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If the price starts dropping, you can rest assured Gox will lag. The lower they go, the longer the lag. Same lag, different excuse. Sometimes they lag because of success. Sometimes they lag because of panic selling. Sometimes they lag because of DDoS. Or, perhaps they lag to manipulate the price?
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