Icbit.se, the bucket shop.

[MPOE-PR]

you want me to believe that prices just naturally happened to move hours after someone blew the whistle, right?

What I see here is that somebody sold a shitload of BTC, filling all available bids.

He then spammed order book with many small asks going down to 9.6. (People say that this is ICBIT's deficiency: number of rows it shows in order book is limited so such spam can hide true market depth.)

9.5 and 9.1 orders you see on this screenshot are mine, BTW.

Apparently "manipulator" tried to squeeze the market right before settling time, but it was delayed this time. And apparently he was out of reserves since market was able to recover up to ~10.80 before settling.

It then shot up to 11.21 in the new session because some of manipulator's positions had to be liquidated and he no longer was able to post ask walls.

So if anything this shows that manipulator and exchange is not the same person, as apparently manipulator didn't get the news that settlement is delayed.

You are, either innocently or not, completely misrepresenting what happened. Let's go through the steps.

1. Icbit.se lists a future which massively diverges from the spot in the wrong direction.

2. Every day right before settlement (~30 seconds) time "someone" sells ~50 contracts.

3. MP buys 200 BTC's worth of contracts.

4. Suddenly, that day the sell is not the regular 50 contracts, but ~400.

5. Next day, broker expects the daily sell volume to be back to the usual 50 contracts, on the assumption that it tracks total volume somehow, and next day volume is back to the usual nothing. This turns out to be false, about 1k contracts are sold in spite of it not making economic sense.

6. Same time, broker tries to sell after that "someone". His order is ignored. Ten seconds to settlement time he tries three more times. Order is ignored again. Ten seconds after settlement time, the ~400 put on the book by "someone", which have the magical property of not being sellable into, disappear from the book.

7. This is publicly announced, as per the original post.

8. The site management has a nervous breakdown, sells BTC all the way to 9.5. This fails to wipe MP's position (which was indisputably the intended consequence).

9. Two hours later, after having done a little research/settling down/having a glass of water, site management pushes the price to 11, in the process retroactively changing trader's logs.

10. To try and get out of this they lock MP's broker's account, on the theory that they will be able to argue that the 30 second pre-settlement locking of the book so as to manipulate the price discussed in 6 will be then played down as "something wrong with one account".

This story does not wash. Icbit is a scammy piece of shit. If the operator were here to admit his wrongdoing it would be just plain scammy. The fact that even once caught the operator is trying to destroy the evidence/play the lie game makes it Bitcoin-level scammy.

That's all.

[1714897317]

1714897317

[MPOE-PR]

• there were market manipulations going on at clearing time (20:00 UTC) since some weeks now
• there was a long discussion in the ICBIT thread, with several proposals how to prevent such manipulations
• Fireball was aware of that discussion, participated, and indicated that ICBIT will take some measures.

None of these are inconsistent with "my intended message". In fact, they support it quite well.

• but Fireball made also clear that he sees a lack of liquidity as the underlying problem

This is inconsistent with the theory Fireball is right: a 1000% of daily liquidity failed to do anything.

Obviously Fireball would claim "lack of liquidity" is the problem: he has a vested interest into maybe tricking some idiot to go to war with this mysterious "manipulator" and lose his shirt fighting the very site.

• today, Fireball announced that the clearing will be delayed by half an hour or so, because of "maintenance work on the current session"

This is perfectly consistent with the theory Fireball is a scammer: a few hours after his scam was blown wide open (as by the original post link) his site suddenly goes into "maintenance". This is just a coincidence, right? Wrong. This is trying to cover his tracks.

• this is the time when you took your 1st screen shot

I took no screenshot.

As I said exchange is allowed to close winning guy's position too (if there is not enough liquidity), and so winning and losing guys will simply cancel each other: var. margin amount will be moved from losing guy to winning guy.

You either naively or purposefully fail to notice that the site is allowed to CLAIM it's selling the winner's position because of lack of liquidity on the loser side of the deal.

What happens in practice is that the site puts out bait bids. If someone bites and the rate goes against them they lose their investment. If it goes against the site they can just arbitrarily close the position in a few points.

Again, this is so much a bucket shop fraudulent establishment it screams. By the book, bucket shop.

Yep, people need to realize that currently it's possible to wreak havoc with relatively small sums of money.

The only thing "it is possible" to do is to donate relatively small sums of money to the dishonest people behind the site. Plain and simple.

[killerstorm]

9. Two hours later, after having done a little research/settling down/having a glass of water, site management pushes the price to 11, in the process retroactively changing trader's logs.

10. To try and get out of this they lock MP's broker's account, on the theory that they will be able to argue that the 30 second pre-settlement locking of the book so as to manipulate the price discussed in 6 will be then played down as "something wrong with one account".

Only two things imply that exchange operator might be behind it: "changing logs" (which might be simple a mistake on trader's side) and "locking MP's broker's account".

But if you think about it, locking MP's broker's account doesn't make that much sense since MP's broker could as well put a bid wall beforehand. Posting bids in last seconds really gives you nothing. So it could be simply a technical glitch.

Of course, it is possible that exchange operator is doing this, but it might be just some trader trying to manipulate the market, thinking that he has more resources than others. As Stephen have noted, you don't really need that much money to manipulate such a thin market.

As for economic sense, see here, educate yourself: https://bitcointalk.org/index.php?topic=50817.msg1340759#msg1340759 (I've outlined this situation back in June 2011.)

I you wonder why manipulator perished not long after MP got involved, it might be simply because MP added more liquidity on long side, thus depleting manipulator's reserves. So it is not a coincidence, there is a rational explanation.

And, by the way, I think your forum signature is wrong: "THE Bitcoin Stock Exchange" will be based on Bitcoin protocol itself: colored coins to represent securities, multi-party transactions for trade, perhaps even orders will be advertised via blockchain if we figure out how to solve bloat issues. Web site you're pointing to is definitely not the definitive solution, it is just a web site ffs. Use of PGP to authorize orders is cute, but (if I'm not mistaken) people need to send their bitcoins to this web site in order to trade, and so they have to trust some random person's web site. That's not how Bitcoin works. You can as well add LR USD payment option, it can work exactly the same way. So there is definitely nothing Bitcoin-specific about MPex, aside from Bitcoin being the only payment system it accepts (which is more like a deficiency, it simply makes sense to accept as many currencies as possible if you aren't utilizing any Bitcoin-specific features anyway). This isn't related to ICBIT discussion, of course, just noticed your signature...

[killerstorm]

This is inconsistent with the theory Fireball is right: a 1000% of daily liquidity failed to do anything.

It all depends on how much liquidity "the manipulator" had, obviously it could be way more than "daily liquidity", whatever it means.

You either naively or purposefully fail to notice that the site is allowed to CLAIM it's selling the winner's position because of lack of liquidity on the loser side of the deal.

In which case you get amount equivalent to initial margin, which isn't bad.

But, yes, due to a lack of transparency a web site can actually do whatever it wants to, in theory. (This is why I'm advocating trading via blockchain. Not just advocating, I'm actually working on this.)

But back to our topic, just because exchange could be dishonest, it doesn't mean that it was.

As I already mentioned, I talked to Fireball before he implemented ICBIT, and I know he had big plans. And I'm sure he is a very good programmer.

I'm sure he put at least $10,000 worth of his time into this project, likely more. This only makes sense if he wanted it to become THE Bitcoin derivatives exchange.

Does it make sense to spend that much effort to run a scammy low-volume bucket shop? Absolutely not.

(BTW making it a scammy bucket shop might be even harder than to make it a true futures exchange since it would require a lot of ad-hoc doohickeys, like a functionality to block a specific trader right before clearing time. It also requires much more daily attention.)

So, again, Fireball could do it, but I'm 99% sure he didn't.

What happens in practice is that the site puts out bait bids. If someone bites and the rate goes against them they lose their investment. If it goes against the site they can just arbitrarily close the position in a few points.

MP's article was just a piece of evidence. OK, we can consider it. Perhaps ICBIT should be more transparent. I want to see full trade log, full information about what happens during clearing time and so on. I don't understand why this information isn't available.

But now you claim that you know that ICBIT is fraudulent with certainty. This is simply bullshit, it just screams cheap propaganda. Do you want to start MPex futures exchanges or something like that?

[picobit]

But now you claim that you know that ICBIT is fraudulent with certainty. This is simply bullshit, it just screams cheap propaganda. Do you want to start MPex futures exchanges or something like that?

MPex has an options exchange, in direct competition with ICBIT's futures market.  Oh, and they benefit greatly from being without competitors, it actually costs 30 BTC just to sign up on MPex!

I don't say this is MPOE's motives, but it sure looks suspicious.

[MPOE-PR]

MPex has an options exchange,

This is true.

Oh, and they benefit greatly from being without competitors, it actually costs 30 BTC just to sign up on MPex!

This is also sort-of true. For one, you can use any of the many brokers (such as coinbr.com) to trade on MPEx without paying the registration fee (you will probably face higher per-transaction fees, but I think even so they'd be less than what icbit charges).

I'd like to state in any event that there's absolutely no "political" (or however you'd call it) motivation in any of this on our side.

Do you want to start MPex futures exchanges or something like that?

We've been trying to get real futures going for a while (as pointed out in the original article linked from the first post). There's no plans to introduce BTC futures nor were there ever any (nor do BTC futures make sense, it'd have to be dollar futures, as explained in the same original article linked in the original post). There were hash-based contracts at some point, that ended with significant losses for the marketmaker.

In which case you get amount equivalent to initial margin, which isn't bad.

This makes any further discussion impossible. If you really think that I don't see what can be said further, we'll just have to agree to disagree.

[Fireball]

MPOE - very bad move of you. You could ask questions directly, instead of putting up a thread with false accusations. Just try to offer better services - that's the best way of advertising. Making false accusations is not.

ICBIT is an open market, where everyone has equal chances and possibilities.
Everyone can participate, and unlike "bucket shops" everyone is also welcome to arbitrage (using spot market, for example), make the market (using advanced algorithms).

Lack of liquidity is an obvious problem for any exchange, but we are rapidly growing, so hopefully this problem will soon disappear. If you remember, MtGox had similar issues in the beginning of its way, because it also was and is a market open to everyone, with its own order book.

Thanks to everyone for defense, this is very appreciated.

[ElectricMucus]

That aren't false accusations until you prove them false, they are just accusations.

And MPOE only linked to the blog post which accuses you of fraud.
A professional response would be an official announcement which rigorously debunks this.... We're waiting...

[MPOE-PR]

MPOE - very bad move of you. You could ask questions directly, instead of putting up a thread with false accusations. Just try to offer better services - that's the best way of advertising. Making false accusations is not.

Other than the obvious point that just calling them false doesn't cut it, why exactly do you expect or imagine you're entitled to private communication? You're not in the WOT, I don't think you've ever talked in #bitcoin-assets, you don't, practically, exist (reference). We're not business partners, we're not friends, what exactly is this entitlement based on?

Until others pointed this out to me I had no idea you were in any way authorized to even talk for that project (and, formally speaking, you are not, I don't seem to see a GPG signed authorization by anyone, for all we know in two weeks someone could register Icicle as a forum handle and claim you were not authorized to speak on icbit's behalf at all).

I'm not going to go into the rest of the assertions you make, mostly because on top of being mostly false they're also quite besides the point.

[Fireball]

A professional response would be an official announcement which rigorously debunks this.... We're waiting...

I always discuss all issues related to the ICBIT trading platform in our thread.

However, this is just hilarious:

Icbit is a scammy piece of shit

I reported this thread to moderator as inappropriate.

[MPOE-PR]

I reported this thread to moderator as inappropriate.

Who are you, usagi?

[ElectricMucus]

A professional response would be an official announcement which rigorously debunks this.... We're waiting...

I always discuss all issues related to the ICBIT trading platform in our thread.

I was suggesting a) publishing it on your company blog (do you have one), if not the site and b) making a new thread concerning this issue with going into the accusations of the blog post in OP in detail.
I am not the one running a "company", do as you like. But don't complain about the consequences later.

[MPOE-PR]

So in the end the conclusion to this is that "Fireball couldn't be manipulating the price because once he manipulated it in my favor", says some "customer" or other.

I guess everyone's been warned.

[Ichthyo]

So in the end the conclusion to this is that "Fireball couldn't be manipulating the price because once he manipulated it in my favor"

So in the end the conclusion is that MPOE raised some accusations, but failed to prove them convincingly.

The fact that Fireball could indeed manipulate ICBIT is correct -- yes he can easily, as well as M.P. can easily manipulate MPOE.

You brought that fact to everyone's attention, which is fine.

But you failed to provide really conclusive evidence, and the way you presented your accusations leave a bad taste. You mixed several possible failure modes up, you engaged into a not related technical discussion, which counts as derailing the argument, you used some really fundamental stuff (like what PGP is or what futures are) in a way as if you didn't understand the basics of the terminology. And you repeatedly mixed unproven assumptions and clever omissions under the facts, as if your intention was to pull of a PR stunt.

And indeed. Everybody had now been warned about the situation regarding ICBIT and MPOE/MPEx likewise.


For me, the only conclusion is that what Bitcoin really needs are trading sites which are constructed in such a way that the "reputation" or the role of the "trusted owner" is replaced by a cold and unbiased trust mechanism, built in a similar way as the blockchain itself.

[koin]

how long until the "i warned you all" post?

[MPOE-PR]

how long until the "i warned you all" post?

I don't really make those, as you've possibly noticed. Not like this is the first time or something.

For me, the only conclusion is that what Bitcoin really needs are trading sites which are constructed in such a way that the "reputation" or the role of the "trusted owner" is replaced by a cold and unbiased trust mechanism, built in a similar way as the blockchain itself.

This is nonsense. The need for trustworthy people isn't going away. They just need to be actually trustworthy, rather than whatever the cat happens to have dragged in.

[davidoski]

Hi,

does anyone know why my trades shown on the picture below have negative profit? I bought 2 contracts at 20.00$ and 20.05$, then sold at 20.5301 and logs show that I lost...

[Ichthyo]

does anyone know why my trades shown on the picture below have negative profit? I bought 2 contracts at 20.00$ and 20.05$, then sold at 20.5301 and logs show that I lost...

From what I can decipher from the image, it looks that the negative amounts are just the ongoing "mark to market" (variation margin). This is just how such a futures platform works. At least once a day, an effective new reference price is established for your open positions. This new price is based on the general market movement. At that point, the gains or losses with respect to the previous reference price are credited or deduced to your account. Since the BUH3 rate went from 21.44 to 20.53 your open positions incurred a loss. When the price goes up again, it will incur a gain. When you close some contracts, just the "weight" of your position is deceased. Only if you close all your positions, then you don't participate in the variation margin.

Since on a futures platform, you do not trade against the platform, but against other market participants, in case your position looses, some other participant's position (with the opposite direction) gains, and vice versa. The regular "mark to market" serves the purpose to prevent that some trader all of a sudden can't cover the losses.

hope that helps


Hint 1: Note, futures trading is not a bucket shop. This thread here was just opened by a competitor of ICEBIT, please take it with a grain of salt.

Hint 2: there is a dedicated thread for ICBIT in the "project development" section. When you post there, then usually "Fireball" (the author of the site) reads and answers your questions....
https://bitcointalk.org/index.php?topic=50817.0

[davidoski]

Thank you for your reply. I simply expected to see in the logs how much I gained/lost with closed position which is how most exchanges accounts works. When I close position I'm not interested in seeing how my variation margin was at this point. Logs lack information about closed position gain/loss.

I posted to this thread not to undermine icbit.se credibility but because it was the first one which showed after conducting the search for "icbit".

If this is inappropriate admin please move it to the correct one.

[killerstorm]

Thank you for your reply. I simply expected to see in the logs how much I gained/lost with closed position which is how most exchanges accounts works. When I close position I'm not interested in seeing how my variation margin was at this point. Logs lack information about closed position gain/loss.

Change in variation margin IS your gain/loss. It is just that it might be spread over multiple log lines.

E.g. suppose you bought at 20, then clearing price that day was 21, you get profit. Then you sell at 20.50, you get loss.

Simply sum this profit and loss and you'll get your overall profit over this trade. (Also, don't forget fees, they can totally ruin your profits, if price difference is smaller than ~1% you get overall loss.)