can exchanges themselves manipulate the price?

[paulie_w]

and would they have any interest in doing so?

[smoothie]

I think so.

What's to stop Mark at Gox from front running huge amounts of cash that he sees is going to be coming in before it gets there?

[kokjo]

I think so.

What's to stop Mark at Gox from front running huge amounts of cash that he sees is going to be coming in before it gets there?

nothing, but that's not price manipulation.

[zvs]

once upon a time, long long ago, i placed a stop-limit sell on a very lightly traded stock

fail

[paulie_w]

I think so.

What's to stop Mark at Gox from front running huge amounts of cash that he sees is going to be coming in before it gets there?

there are only a few people with access to 250,000+ btc wallets right?

[giszmo]

If the question is if they can show you a price (last trade) that is fake, i would say they can't without getting caught. People complain all the time about having had a buy order at 22 that did not get filled when the price briefly fell below 22 and to an extent an exchange can deal with such complaints and explain them with long trading queues etc. but in normal times if I offer to sell for 23 and the exchange tells people about prices around 27, I will not stay with that exchange for long. If you trade at the edge of the order book you expect to see immediate results that can't be faked without taking a loss.

The other thing with front running trades is a very obvious issue if you trade volumes that move the market.

The other issue of exchanges maybe doing fractional reserve is also a fun issue. Imagine Gox had some rough time and decided that they can pretend not to be broke by just using their customers' money. Lets say they use 10% of their customers' money (banks usually use 95 to 99.99%) they will be in deep shit if some day they have to show the money. That would be maybe 100k bitcoin that saved them paying bills of $100k in 2011 and in 2014 this $100k loan is worth $10M if the Bitcoin rises to $100.

[jerfelix]

I'm too lazy to dig up the thread, sorry, but I seem to remember a time back in 2011 when there was community doubt in whether Mt. Gox really had the Bitcoins, or whether they were essentially broke.  In response. the head of Mt Gox (Magical Tux, I believe, at the time) publicized that he was going to move a bunch of bitcoins from one wallet to another, simply to prove that he was still solvent.

Everyone could see it in the Block Chain, and there was a collective sigh of relief. 

Then the price continued on its path down to 2.

[giszmo]

I'm too lazy to dig up the thread, sorry, but I seem to remember a time back in 2011 when there was community doubt in whether Mt. Gox really had the Bitcoins, or whether they were essentially broke.  In response. the head of Mt Gox (Magical Tux, I believe, at the time) publicized that he was going to move a bunch of bitcoins from one wallet to another, simply to prove that he was still solvent.

Everyone could see it in the Block Chain, and there was a collective sigh of relief. 

Then the price continued on its path down to 2.

Yes, sure, but did he move 100% or really close to 100% of MtGox' money?

[yucca]

The spread is publicly disclosed and easy to audit, just buy and sell some amount using seperate wallets. I don't see how they could do that without being seen.