Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[solex]

Here's my speculation: Bitstamp has lost almost 19k coins and will either have to buy the coins back somehow or go under. I don't think $5M is enough to really make Stamp go out of business so that means 19k coins will be bought. Meanwhile the hacker is also sitting on almost 19k coins but he will probably be looking to sell those coins off-exchange and he may keep a percentage of coins around for later. So the net effect I think will be that the price is going up short term because Stamp is buying to cover their losses and smart speculators will know and front run that. Once all doubt is cleared about Stamp and they are back in business (which I think is very likely) it's probably rally time for a bit and all the shorts will have to watch out for an epic squeeze.

The next US Marshall's auction might see a keen bidder from Central Europe.

[byronbb]

Am I seeing a huge influx of new accounts dedicated to trolling fud or is this just more of the same from this site?

[ChartBuddy]

Bitfinex

Explanation

[wpalczynski]

What makes the situation suspicious is that apparently they usually only kept 3k or so in the hot wallet according to someone who analyzed the address.  Shortly before the "hack" there was a large deposit made into the account making the large theft possible.  How reliable the blockchain analysis is on which the above conclusions are based I do not know but if that happens to be true its hard to imagine how this could be a just a case of a hacked hot wallet.

I just don't understand how bitstamp, one of the worlds leading bitcoin exchanges, can have their wallets compromised to the tune of 19,000 bitcoins. Does this smell like an inside job or a royal screw up?

[chopstick]

It's probably an inside job. But why??? Never underestimate human greed.

[JayJuanGee]

Have to say I'm surprised I didn't have to tweak the scaling factor between Stamp and Finex. Quite similar market depths there.

I'm impressed by how stable the finex feed is, no more missing data segments, yet.

I wonder if those problems with the stamp feed were some kind of signal or precursor?

You guys are daytrading again, aren't you

LOL!  

Yup! Been "day trading" ever since 450 CAD

Every payday I trade as much fiat for bitcoin as I can afford to.  

amidoingitright?

You must have a good little stash of BTC, then?  hahahaahahaha   

maybe high cost per BTC, but if the price goes back up, then the average cost per btc will begin to seem cheap.

[ChartBuddy]

Bitfinex

Explanation

[Deadstock]

I'll be happy at $300

[Fatman3001]

I'll be happy at $300

I'll raise that to $750

[billyjoeallen]

Of course! Why didn't I think of this before? Coinbase was using Stamp for liquidity! That meant that if they ran out of coins, they would buy from Bitstamp. They went down because they ran out of coins and had nobody to buy from!

CB is back up now which means they either got coins from selling customers, pulled some of their reserves from cold storage,  or they found a different exchange (BFX or Kracken) from which to buy.

[Deadstock]

I'll be happy at $300

I'll raise that to $750

if it hits $750, a cold one is on me 

[Patel]

[octaft]

What makes the situation suspicious is that apparently they usually only kept 3k or so in the hot wallet according to someone who analyzed the address.  Shortly before the "hack" there was a large deposit made into the account making the large theft possible.  How reliable the blockchain analysis is on which the above conclusions are based I do not know but if that happens to be true its hard to imagine how this could be a just a case of a hacked hot wallet.

I just don't understand how bitstamp, one of the worlds leading bitcoin exchanges, can have their wallets compromised to the tune of 19,000 bitcoins. Does this smell like an inside job or a royal screw up?

Perhaps deposits are put directly into the hot wallet, and since the price was plummeting, they were getting a larger than usual amount of deposits?

If it really wasn't an inside job, maybe the person knew about the exploit for a while and was waiting for a price drop so they could snag a larger amount of bitcoins in one go.

[ChartBuddy]

Bitfinex

Explanation

[billyjoeallen]

I don't have an account at Bitsamp so someone who knows more about it can correct me, but as I understand it, there isn't direct short-selling there. You have to borrow coins from other account holders and sell them, then presumably buy back on the exchange to cover your short.

If this is the case, then what if someone compromised Stamp a long time ago to not only sell non-existent coins but also to lend them out at interest? That could explain low swap costs (real coin lenders have to compete with fake coin lenders driving swap costs down). More importantly it could explain the prolonged bear market.

With naked short-selling, an unethical billionaire or group of rich people could drive the BTC price down for a prolonged period of time in order to acquire equity in the Bitcoin ecosytem at a steep discount. I'm pretty sure the FBI would consider this criminal behavior if it turns out they auctioned off their confiscated coins for a fraction of their true worth.

This is speculation, but it seems like an extremely convenient time for Stamp to get hacked just as they had an unusually large amount of coins in their hot wallet. That is further circumstantial evidence of a previously compromised security system. 

Or it could be an inside job. I don't know the operators, but when I think of Slovenians, the term "rock-solid highly ethical financial management" does not come to mind.

[freebit13]

What makes the situation suspicious is that apparently they usually only kept 3k or so in the hot wallet according to someone who analyzed the address.  Shortly before the "hack" there was a large deposit made into the account making the large theft possible.  How reliable the blockchain analysis is on which the above conclusions are based I do not know but if that happens to be true its hard to imagine how this could be a just a case of a hacked hot wallet.

I just don't understand how bitstamp, one of the worlds leading bitcoin exchanges, can have their wallets compromised to the tune of 19,000 bitcoins. Does this smell like an inside job or a royal screw up?

Read that yesterday too, here it is: https://bitcointalk.org/index.php?topic=915160.0

Edit: ^^ this points to more than just a wallet hack, whoever swept those coins into that wallet before clearing it must have had access to more than just the wallet.dat file...

[wpalczynski]

It would be great if your theory about Stamp being responsible for the prolonged Bear market would be correct but that would mean that a lot more then 19K BTC was absconded with.

@wpalczynski

I don't have an account at Bitsamp so someone who knows more about it can correct me, but as I understand it, there isn't direct short-selling there. You have to borrow coins from other account holders and sell them, then presumably buy back on the exchange to cover your short.

If this is the case, then what if someone compromised Stamp a long time ago to not only sell non-existent coins but also to lend them out at interest? That could explain low swap costs (real coin lenders have to compete with fake coin lenders driving swap costs down). More importantly it could explain the prolonged bear market.

With naked short-selling, an unethical billionaire or group of rich people could drive the BTC price down for a prolonged period of time in order to acquire equity in the Bitcoin ecosytem at a steep discount. I'm pretty sure the FBI would consider this criminal behavior if it turns out they auctioned off their confiscated coins for a fraction of their true worth.

This is speculation, but it seems like an extremely convenient time for Stamp to get hacked just as they had an unusually large amount of coins in their hot wallet. That is further circumstantial evidence of a previously compromised security system.  

Or it could be an inside job. I don't know the operators, but when I think of Slovenians, the term "rock-solid highly ethical financial management" does not come to mind.

[Hlavax]

I don't have an account at Bitsamp so someone who knows more about it can correct me, but as I understand it, there isn't direct short-selling there. You have to borrow coins from other account holders and sell them, then presumably buy back on the exchange to cover your short.

If this is the case, then what if someone compromised Stamp a long time ago to not only sell non-existent coins but also to lend them out at interest? That could explain low swap costs (real coin lenders have to compete with fake coin lenders driving swap costs down). More importantly it could explain the prolonged bear market.

With naked short-selling, an unethical billionaire or group of rich people could drive the BTC price down for a prolonged period of time in order to acquire equity in the Bitcoin ecosytem at a steep discount. I'm pretty sure the FBI would consider this criminal behavior if it turns out they auctioned off their confiscated coins for a fraction of their true worth.

This is speculation, but it seems like an extremely convenient time for Stamp to get hacked just as they had an unusually large amount of coins in their hot wallet. That is further circumstantial evidence of a previously compromised security system. 

Or it could be an inside job. I don't know the operators, but when I think of Slovenians, the term "rock-solid highly ethical financial management" does not come to mind.

what do you mean by "non-existent coins"?

[billyjoeallen]

this points to more than just a wallet hack, whoever swept those coins into that wallet before clearing it must have had access to more than just the wallet.dat file...

I agree, but it could be that the coins weren't swept and the thief had to wait for an unusually large amount of coins to be in the hot wallet, but how would he know that would ever happen or that their wouldn't be an even better time to make his move?

What puzzles me is that the crash apparently started BEFORE the theft. Did someone know what was about to happen and trade on inside information? Did the Stamp operators discover the theft and start trading the predictable plunge before disclosing it? Or maybe nothing nefarious happened (other than the theft) and crashes are just a normal part of a bear market. I dunno.

Whatever happened, it worked out for me personally as I had a short position and a bunch of lowball bids in ahead of time. I consider lowball bids with a low probability of ever getting filled sort of like lottery tickets. It makes sense to have a small part of one's portfolio dedicated to bottom feeding.

[billyjoeallen]

what do you mean by "non-existent coins"?

I mean coins that were not ever mined but only existed as credits into an account at Bitstamp.