Bitstamp the new OKCOIN 2.0 volume manipulators. Fake Wall observer.

[Fiat_Hodler]

To the mods: I know bitstamp may pay/pressure you to relocate this thread to a part of the forum that will not see the light of day (already happened to my last thread) but please resist the urge to censor the forums and prove you are corrupt.

This thread will be dedicated to observing fake volume exchanges (including bots that execute real trades with 0% fees to make it seem like the exchange has many traders) and the effects of their actions on the BTC price/reputation (of bitcoin and also unregulated exchanges).

 This may also help users understand the risks of using certain exchanges that are battling for a piece of the market once traders start to choose safer more reliable exchanges.

Also thanks to a reddit user for posting these images: http://imgur.com/a/NKvwl

https://www.reddit.com/r/Bitcoin/comments/3o8onj/is_gemini_an_exchange_for_institutional_ants_24hr/cvvf9fa
 

[1715274582]

1715274582

[Fiat_Hodler]

TLDR: It may be illegal to use fake volume trading bots now that the CFTC is involved in regulating bitcoins. Exchanges beware!!!

From the coindesk article about the CFTC getting involved in bitcoin:
 http://www.coindesk.com/the-cftcs-not-so-hidden-message-traders-beware/

Also note the CFTC may "conduct extraterritorial enforcement actions in this area" :
http://www.coindesk.com/bitcoin-as-a-commodity-what-the-cftcs-ruling-means/


"
As highlighted by the TeraExchange case, US regulations prohibit a transaction that can be characterized as a “wash trade”, an “accommodation trade”, a “fictitious sale”, or a trade that “is used to cause any price to be reported, registered, or recorded that is not a true or bona fide price”. These provisions have been broadly applied to any situation where the CFTC believes the process by which a transaction occurs was not fair, open and competitive (unless otherwise provided for under its rules). And they create potential liability for the traders, not just the exchange.


For trades done on a CFTC registered platform, such as a SEF like TeraExchange or a contract market, there are specific prohibitions against (1) violating bids or offers, (2) intentional or reckless disregard for the orderly execution of transactions during a closing period, or (3) “spoofing”, which is defined in the statute as “bidding or offering with the intent to cancel the bid or offer before execution”. Spoofing is an area of particular CFTC attention recently.


There are prohibitions related to the theft or conversion and use of nonpublic information from the US government.
CFTC regulations broadly prohibit fraud in connection with any transaction under its jurisdiction. Technically, the language of one of the provisions reaches any cash commodity transaction in interstate commerce, although it is unlikely the CFTC wants to become the general overseer of fraud in all commercial marketplaces. But it does mean the CFTC may be able to exercise its discretion to bring a case if it otherwise becomes focused on a problem in the marketplace. Moreover, the relevant statute specifically prohibits a person from entering into a swap transaction “knowing, or acting in reckless disregard for the fact that its counterparty will use the swap as part of a ... fraud against a third party". The CFTC does not generally have to show actual intent to defraud, but can bring a case based on reckless conduct.


The CFTC has broad authority to police for manipulation. Here, the CFTC will look at manipulation not only directly in the derivatives market, but also in the “cash” market where it believes there is the potential for a price distortion effect on a related derivatives market. The CFTC does not need to prove actual intent to manipulate, but simply recklessness. And it has jurisdiction to seek serious sanctions, including fines of $1m per violation, and for attempted manipulation, which requires only evidence of the necessary state of mind (intent or recklessness) and an act that it can say was taken in furtherance of the manipulation."

[Fiat_Hodler]

found this on reddit:

https://www.reddit.com/r/Bitcoin/comments/3o8onj/is_gemini_an_exchange_for_institutional_ants_24hr/cvvf9fa

"[–]BTCVIX 1 point 2 hours ago
I am in both agreement and disagreementat the same time with you & /u/realitycheck123456 so let me start with agreement side of things: there is clearly a pick-up in wash trading across Huobi, OKC, and Bitstamp -- yes even BitStamp although you seemed to gloss over that as it didn't fit neatly into your ethnocentric narrative of the Chinese boogeyman. Here is video of the OKC volumizer at work: https://twitter.com/BTCVIX/status/652179059263307776 -- here is Lock Ness monster style screen shots of OKC volumizer: http://imgur.com/a/GywMv -- now let me show you that Stamp is engaging in a similar volume washing although not to magnitude of the Chinese exchanges as Stamp does still have fees: http://imgur.com/a/NKvwl
All exchanges are somewhere on the bucket shop spectrum -- even trading on BATS is quasi-bucket shop so it is really a matter or being aware of what I agree is some form of volume washing spoofing but I am not so certain it actually has an intent other than to just inflate volume and appear more liquid then what some would deem as "reality" (more not this in a bit). It is very likely NOT the exchange but a very cozy MM that has some deal in place to provide X quota of volume or book depth per day in turn they get to feed off of the retail order flow probably not all that dissimilar then Flash Boys a la Michael Lewis.
I long ago stopped feigning outrage at these activities and have become a proponent of the "fake it till you make it" model of bootstrapping an exchange. Why do I say this ? Well it is a function of network effect as even the appearance of liquidity begets more liquidity so it becomes self-fulfilling. I actually would say this is a global trend in general as think of the social dating sites and their many socket puppet accounts to give the appearance of a deep pool of potential suitors. It ends up building upon itself and clearly it has offered some success -- I am not stating this as a perfect solution and it brings a whole host of other issues; however it does allow the business a fighting chance at the beginning because from my standpoint the only marketing angle I hear from the ghosttown exchanges is "our volume is REAL though" -- yes I am sure the 79 coins that traded on Gemini were "real" but I am very sure I could easily fill my positions in the 200k BTC of OKC wash trading even if only 5-10% of that was "real" whatever that means."

[Fiat_Hodler]

Bobby Lee on exchange volume deception in China:

https://www.reddit.com/r/Bitcoin/comments/21s8ea/bobby_lee_on_exchange_volume_deception_in_china/

https://www.youtube.com/watch?v=2M12zzwNkCo&t=12m35s

[1Referee]

Nearly all Bitcoin exchanges have been guilty of faking volume. Especially in these lower volume days they are doing their work to keep the volumes at least above a certain amount. Can you name 1 exchange that doesn't do this?

[Fiat_Hodler]

Nearly all Bitcoin exchanges have been guilty of faking volume. Especially in these lower volume days they are doing their work to keep the volumes at least above a certain amount. Can you name 1 exchange that doesn't do this?

I dont know.

Doesnt seem like gemini has just yet.  lol... under 100btc traded or something haha.

[Its About Sharing]

Well, now that the CTFC is involved, I imagine exchanges are not going to want to attract undue attention, but it is a double edged sword regarding their "popularity" and continued existence.

Pressure needs to be placed on the exchanges, even though exchanges are responsible for most of this, I can imagine non exchange bots are also involved.
And I have a feeling that pressure is on the way...

Its About Sharing

[fish731]

Well, now that the CTFC is involved, I imagine exchanges are not going to want to attract undue attention, but it is a double edged sword regarding their "popularity" and continued existence.

Pressure needs to be placed on the exchanges, even though exchanges are responsible for most of this, I can imagine non exchange bots are also involved.
And I have a feeling that pressure is on the way...

Its About Sharing

Can the U.S. Commodity Futures Trading Commission do anything about exchanges outside the US? It wouldn't be easy for it to prosecute a Chinese exchange, and the Chinese government seems happy to let their exchanges continue wash trading. The US has no extradition treaties with China. It seemed powerless to prosecute Mark Karples and he was based in Japan which is far more US friendly.

[gentlemand]

I was under the impression they've offered zero fees to certain traders. That being the case there's nothing to stop said traders beefing up volume in an attempt to attract some fresh meat to prey upon.

[Its About Sharing]

Well, now that the CTFC is involved, I imagine exchanges are not going to want to attract undue attention, but it is a double edged sword regarding their "popularity" and continued existence.

Pressure needs to be placed on the exchanges, even though exchanges are responsible for most of this, I can imagine non exchange bots are also involved.
And I have a feeling that pressure is on the way...

Its About Sharing

Can the U.S. Commodity Futures Trading Commission do anything about exchanges outside the US? It wouldn't be easy for it to prosecute a Chinese exchange, and the Chinese government seems happy to let their exchanges continue wash trading. The US has no extradition treaties with China. It seemed powerless to prosecute Mark Karples and he was based in Japan which is far more US friendly.

Funny situation but I believe the US government has certain "rights" over US Citizens that are outside the U.S. 
Not sure where this goes but I can only imagine with these trade agreements spreading everywhere that we will continually lose more and more rights as individuals.

[Mickeyb]

I was under the impression they've offered zero fees to certain traders. That being the case there's nothing to stop said traders beefing up volume in an attempt to attract some fresh meat to prey upon.

I don't believe traders would do this on their own. This is just a work for them and no gain. Maybe, if they get compensated by the actual exchange. But in this case it's easier for the exchange to beef up their volume by faking the trades than to pay someone to do it for them.

[Fiat_Hodler]

Where's the evidence for your claims OP?

I have personally observed charts where bitstamp has the same kind of activity as okcoin, where there are massive amounts of BTC traded and no movement in the price whatsoever but also other users have noticed this fake wash trade activity and posted evidence. I posted this on the thread earlier but will repost for your convenience. Please read their full post but the link for bitstamp fake trading is: http://imgur.com/a/NKvwl

found this on reddit:

https://www.reddit.com/r/Bitcoin/comments/3o8onj/is_gemini_an_exchange_for_institutional_ants_24hr/cvvf9fa

"[–]BTCVIX 1 point 2 hours ago
I am in both agreement and disagreementat the same time with you & /u/realitycheck123456 so let me start with agreement side of things: there is clearly a pick-up in wash trading across Huobi, OKC, and Bitstamp -- yes even BitStamp although you seemed to gloss over that as it didn't fit neatly into your ethnocentric narrative of the Chinese boogeyman. Here is video of the OKC volumizer at work: https://twitter.com/BTCVIX/status/652179059263307776 -- here is Lock Ness monster style screen shots of OKC volumizer: http://imgur.com/a/GywMv -- now let me show you that Stamp is engaging in a similar volume washing although not to magnitude of the Chinese exchanges as Stamp does still have fees: http://imgur.com/a/NKvwl
All exchanges are somewhere on the bucket shop spectrum -- even trading on BATS is quasi-bucket shop so it is really a matter or being aware of what I agree is some form of volume washing spoofing but I am not so certain it actually has an intent other than to just inflate volume and appear more liquid then what some would deem as "reality" (more not this in a bit). It is very likely NOT the exchange but a very cozy MM that has some deal in place to provide X quota of volume or book depth per day in turn they get to feed off of the retail order flow probably not all that dissimilar then Flash Boys a la Michael Lewis.
I long ago stopped feigning outrage at these activities and have become a proponent of the "fake it till you make it" model of bootstrapping an exchange. Why do I say this ? Well it is a function of network effect as even the appearance of liquidity begets more liquidity so it becomes self-fulfilling. I actually would say this is a global trend in general as think of the social dating sites and their many socket puppet accounts to give the appearance of a deep pool of potential suitors. It ends up building upon itself and clearly it has offered some success -- I am not stating this as a perfect solution and it brings a whole host of other issues; however it does allow the business a fighting chance at the beginning because from my standpoint the only marketing angle I hear from the ghosttown exchanges is "our volume is REAL though" -- yes I am sure the 79 coins that traded on Gemini were "real" but I am very sure I could easily fill my positions in the 200k BTC of OKC wash trading even if only 5-10% of that was "real" whatever that means."

[kwukduck]

Everyone with half a brain knows the whole btc economy is fake. The real volume is maybe a few hundred btc per day being traded globally. If that's not failing I don't know what is.

[LMGTFY]

Everyone with half a brain knows the whole btc economy is fake. The real volume is maybe a few hundred btc per day being traded globally. If that's not failing I don't know what is.

"The real volume is maybe.... If that's not failing..."

OK, so you don't know what the real volume is, but you do know that if it is as low as you think it is, it's failing? It seems to me that the first thing you should be doing is dispensing with that "maybe" by finding out what the real volume really is. Other wise your post is nonsensical.

[Amph]

Everyone with half a brain knows the whole btc economy is fake. The real volume is maybe a few hundred btc per day being traded globally. If that's not failing I don't know what is.

it will not falls because of the volume, it matter more if the buyers can't stand against the sellers pressure, and lower their asking price

the current little value is right for the current little volume there is

[gentlemand]

Everyone with half a brain knows the whole btc economy is fake. The real volume is maybe a few hundred btc per day being traded globally. If that's not failing I don't know what is.

Right on. And I personally am posting 37% of the content on here every day. I know for a fact another 41% is the work of a lonely supercomputer in NORAD. Most of the attendees and speakers at events are androids too.

[Fiat_Hodler]

Everyone with half a brain knows the whole btc economy is fake. The real volume is maybe a few hundred btc per day being traded globally.

Your post is contradictory therefore it is FUD.

You say no-one knows the actual volume but then make up an arbitrary number out of thin air...

[Fiat_Hodler]

sad just how far this the bitstamp exchange has fallen. Fake volume bot going ham.







The order books are razer thin yet "thousands of BTC get traded back and forth". Classic chinese exchange behavior.

What have we learnt?

That Slovenian exchanges are the new china.

As much as I hate regulation I no longer see any difference in the trustworthiness of BTC-e, Bitstamp and OKcoin. They all are way too dodgy. If you are storing your funds on any of these exchanges dont be surprised if you get goxed.

Time will tell if the USA exchanges dont follow in the ways of the old exchanges.

[Mieehayii]

I think there should no one not know chinese fake trading, since the end of 2013, this has been trumpeted. as for okicon, their ex-CTO courage to stand up to testify against this fake exchange.

[Fiat_Hodler]

When an actual price change occurs bitstamp volume is tiny. But when nothing is happening suddenly people "trade" thousands of Bitcoins back and forth with no price movement whatsover.

Here are two pics comparing bitstamp to bitfinex during an actual price change. This again goes to show that there is no real liquidity on bitstamp and most of the trades occurring are "wash trades" (they use bots to trade with each other so people will think lots of traders use their site). If you actually want to make large purchases of bitcoins you better find yourself a different exchange.

Not to mention the trust issues that should occur to consumers who ought to think carefully before dealing with companies that engage in such deceptive practices.


Bitstamp:





Bitfinex: