[OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading

[wilfried]

I found an exploit on bitfinex where I'm able to place an ulimited amount of orders on margin trading without having the liquidity to do so and I can manipulate the order book. I'm not attempting to manipulate the market right now - I just wanted to demonstrate this exploit. Please fix it.

Yep, we can all do this. And we can also all easily see when someone who just figured this out is playing around: You can put up 100 x 10 BTC bids or asks but you can't put up 1 x 1000 BTC - thus everybody can easily see that someone just figured this out. A bid order of 100s of small orders is quite easy to see.

It's no big deal, someone buys or asks from your "wall" and the orders cancel after stretching your margin to the limit.

You should be careful placing toy walls close to the spread if the book is thin overall because at some point I'll just FOK your order until you're at your limit and move the market with real actual funds backed by my exchange wallet (or trading wallet if you put a bid up) and then you're toast. And we can do the math, if you put up an ask of 1000 BTC with 100 orders when it's easy to see that you're only able to short 10 BTC - period. Thus I'll just put a real 100 BTC bid there and move it up until you get a margin call or your jimmies get sufficiently rustled. And I'm no big fish at BFX just because I can put real 100 BTC bids and asks up, there are quite a few 1000+ BTC position players in our sandbox.

It has been possible to add 100s of orders of your maximum order size for a very long time and it's never been a problem except for those who do it for fun.

if one places more than one order, where each order is @ max margin, is it possible that more than order gets filled?

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[Bonez0r]

if one places more than one order, where each order is @ max margin, is it possible that more than order gets filled?

If you have like $100 in your exchange wallet then you can put a bids for 100 BTC at $1. Now the system assumes that these may get hit at some point and that you should therefore be able to place sell orders for them in advanced, so now you can place a 100 BTC ask at say $720 and rustle people's jimmies. Now, if this ask is hit then it will just cancel since you don't have 100 BTC - but you can place the order.

What? That seems like a serious design flaw to me. So you can basically bluff and manipulate the market that way? To be honest I can't believe they allow this.

[Bonez0r]

What? That seems like a serious design flaw to me. So you can basically bluff and manipulate the market that way? To be honest I can't believe they allow this.

Yes, you really can bluff and rustle n00bs jimmies.

But "manipulate" the market? Not too sure about that one.. Just now someone here apparently read my post and put buy orders at $0.01 and put up 40k BTC asks. Were my jimmes rustled by that? No, of course they weren't.

I hate to sound rude but if that's all it takes to rustle your jimmes then you really shouldn't be trading at all.

Of course you can manipulate the market. You put up a huge fake wall just above the lowest ask. Real traders who want to sell will set their price below the wall. You move the wall down a little, the sellers match that movement and adjust their prices down a little to stay under the wall, rinse and repeat. The result is that you manipulate the price downward. Then when you've moved the price a decent amount, you buy cheap, remove the wall, watch the price go up again and sell your bitcoins at a profit. How can you say this is totally fine?

[fonzie]

Of course, it´s fine   This has nothing to do with possible market manipulation....






Edit:
All buy walls on all exchanges are mostly fake. BTC isn´t worth more than 200 bucks.

[Bonez0r]

Of course you can manipulate the market. You put up a huge fake wall just above the lowest ask. Real traders who want to sell will set their price below the wall. You move the wall down a little, the sellers match that movement and adjust their prices down a little to stay under the wall, rinse and repeat. The result is that you manipulate the price downward. Then when you've moved the price a decent amount, you buy cheap, remove the wall, watch the price go up again and sell your bitcoins at a profit. How can you say this is totally fine?

..but then again, I place my orders according where it looks like I should place them on the chart and mostly ignore the orderbook. As I said: There is such a thing as hidden orders on Bitfinex and the minimum size for placing them is only 100 BTC.

From their FAQ:

What is a "Hidden order"?

A hidden order is an order which does not appear in the orderbook, and thus doesn't influence other market participants. See the fees page for minimum size and fee applicable.

Right there they're saying that large orders can influence the market. Intentionally influencing the market (as in the case of fake walls) is manipulating it. And why would they have an orderbook at all if it's not reliable? I still say that being able to put up orders on the exchange for funds you don't have is faulty design.

[Drabla]

[...] Real traders who want to sell will set their price below the wall. [...]

No, they don't.

[Bonez0r]

[...] Real traders who want to sell will set their price below the wall. [...]

No, they don't.

Not all traders, no. But even if it's just some bots that want to make a quick sell, it does happen and it does drive the price down.

[wilfried]

i am completely fine with how it is, because that way you can mix long term orders with short term orders, lets say:

-i go short at 800 and put a stop buy at 805 and a limit buy at 750 and my margin is exhausted.
-i still can have a decent buy limit order @ 300 to catch a bottom.

[mattco]

i am completely fine with how it is, because that way you can mix long term orders with short term orders, lets say:

-i go short at 800 and put a stop buy at 805 and a limit buy at 750 and my margin is exhausted.
-i still can have a decent buy limit order @ 300 to catch a bottom.

I agree, but it should ideally be capped to x5 or x10 your balance. The trick with Exchange to put 10000 btc orders should really be fixed. I was the one who placed those 40k and 60k walls btw, apologies if it caused any panic

[Bonez0r]

[...] Real traders who want to sell will set their price below the wall. [...]

No, they don't.

Not all traders, no. But even if it's just some bots that want to make a quick sell, it does happen and it does drive the price down.

Let me try to understand your point of view better. Please answer this simple question:

A 100 BTC ask in the orderbook is:

[ ] Scary and you should put asks below it or sell at market immediately
[ ] A chance to do a big buy and take a big position without moving the market

[X] I'm absolutely not worried for myself as i'm only providing swaps, not trading.

Does every argument someone makes in a post have to come from worry about personal gain? I simply see something that doesn't make sense.

[fonzie]

Plain and simple for all the stupids in here: It´s OK to have this feature but no way it should be displayed in the public order book.
Even a monkey would understand this....

[Ichthyo]

Of course you can manipulate the market. You put up a huge fake wall just above the lowest ask. Real traders who want to sell will set their price below the wall. You move the wall down a little, the sellers match that movement and adjust their prices down a little to stay under the wall, rinse and repeat.

Nice proof that you're clueless.

Some people will behave according to your "algorithm". These are those kind of noobs which buy at all time high and sell at the bottom, just before the market turns round. And yes, the market needs a herd of clueless noobs. Those are there to allow skilful traders to make extra profit.

Some points you need to understand

• market equilibrium is driven by real forces, not fake power.
• people do buy / sell at a given point, because they want to do so, for whatever reason.
• when your strategy is built on cheating other people, be prepared to be gamed yourself.

[Ichthyo]

...who placed those 40k and 60k walls btw, apologies if it caused any panic

In trading, if someone panicks, he deserves to be burned hard.
If someone can't control his emotions, he'd be better of putting the money into some kind of pension fund at his local bank.

[Sukrim]

Yeah, because mt4 on btc-e works sooo great!

Do yourself a favor and go trade there, with their amazing Bulgarian support and real tested platform.

Also how did anyone lose anything now? If you sell because you see something, you are still selling out of free will, not getting liquidated or forced in any way.

[Ichthyo]

I simply see something that doesn't make sense.

There is a much deeper question involved here.

If we want to protect people against each other actions, if we try to prevent every possible way of "manipulation", we end up at a regulated market. In fact, the traditional markets became more and more regulated exactly this way: Whenever someone got burned, he immediately starts yelling, asking the "authorities" to protect him against losses. But if the "authorities" then place taxes on the gains, everyone is pissed off.


That being said -- an order book just shows offers, not more. It is not binding.
Fake orders and real orders can be placed and pulled any time. This shows some current sentiment, not more, not less. But for a reliable judgement, you should look at the actual deals, and more importantly, you should look at the actual trading volume.


Others have already pointed out, that it can be convenient for a trader to have long term orders sitting there, and temporarily place short term orders closer to the spread. At times you'll even place several buy and sell orders at the same time.

Now the proposal is to prevent or limit this pattern. Personally I think this shows a questionable mindset: basically you assume that it is necessary to watch and guard people's actions. This is nannying.

If we we consider placing such fake walls harmful, the proper way of defence would be not to "regulate", but to make them expensive: simply deduce the trading fees from any order considered for execution, even if the order will be discarded due to lacking margin.  

[wilfried]

hy bitfinex!
you changed the website session timeout from neverending to some half hour or so. could you provide the option to set it to neverending?
also when re-loging in i get some api output but not the website, is there a possibility to get directly to the webgui?
thx

[wilfried]

I simply see something that doesn't make sense.

There is a much deeper question involved here.

If we want to protect people against each other actions, if we try to prevent every possible way of "manipulation", we end up at a regulated market. In fact, the traditional markets became more and more regulated exactly this way: Whenever someone got burned, he immediately starts yelling, asking the "authorities" to protect him against losses. But if the "authorities" then place taxes on the gains, everyone is pissed off.


That being said -- an order book just shows offers, not more. It is not binding.
Fake orders and real orders can be placed and pulled any time. This shows some current sentiment, not more, not less. But for a reliable judgement, you should look at the actual deals, and more importantly, you should look at the actual trading volume.


Others have already pointed out, that it can be convenient for a trader to have long term orders sitting there, and temporarily place short term orders closer to the spread. At times you'll even place several buy and sell orders at the same time.

Now the proposal is to prevent or limit this pattern. Personally I think this shows a questionable mindset: basically you assume that it is necessary to watch and guard people's actions. This is nannying.

If we we consider placing such fake walls harmful, the proper way of defence would be not to "regulate", but to make them expensive: simply deduce the trading fees from any order considered for execution, even if the order will be discarded due to lacking margin.  

nono, regulation by cost or regulation by law = ==, = bad

[btcva]

I have a question about the new way that Bitfinex integrates the Bitstamp order book.  Raphael has said that now Bitstamp orders are augmented by between 0.15% and 0.25% before being displayed on the Bitfinex order book.  However, take a look at these images of Bitstamp and Bitfinex order books taken at the same time earlier today:

Bitstamp's order book - http://imgur.com/D8TqTks
Bitfinex's order book - http://imgur.com/AKh049t

Based on what Raphael said about price augmentation, the lowest ask on Bitfinex's order book should be no greater than $706.91 ($705.15*1.0025) - the lowest displayed is $709.41. And the highest bid should be no lower than $706.06 ($705*1.0015) - the highest displayed is $704.34. So either what Raphael told us about integration of the two order books is wrong, or the process is error-prone. And I have observed this phenomenon very often. This, to me, is very troubling.  Does anybody have an explanation for this?

[oda.krell]

Didn't actively trade on bitfinex for a while, but I keep checking up on it once in a while, as I'm still interested in it.

Can someone give me a high level summary of how the bug/hack is being resolved by the owners? They rolled back all trades from the time in question, or only a part of them? And I'm trying to understand: it's a full rollback (i.e. no gains are credited from that time, but also no losses)? Or are people that got margin called going to have to suck up a loss as a result of the hack?

[ledmaniak]

I have a question about the new way that Bitfinex integrates the Bitstamp order book.  Raphael has said that now Bitstamp orders are augmented by between 0.15% and 0.25% before being displayed on the Bitfinex order book.  However, take a look at these images of Bitstamp and Bitfinex order books taken at the same time earlier today:

Bitstamp's order book - http://imgur.com/D8TqTks
Bitfinex's order book - http://imgur.com/AKh049t

Based on what Raphael said about price augmentation, the lowest ask on Bitfinex's order book should be no greater than $706.91 ($705.15*1.0025) - the lowest displayed is $709.41. And the highest bid should be no lower than $706.06 ($705*1.0015) - the highest displayed is $704.34. So either what Raphael told us about integration of the two order books is wrong, or the process is error-prone. And I have observed this phenomenon very often. This, to me, is very troubling.  Does anybody have an explanation for this?

Since the update, I never see bitstamp orders being executed. I had a limit order at 702.35, price drops below 702 and still the order was not executed..

By the way, it seems that bitfinex solved the 'issue' where you could put 10 orders in the order book that are way higher than what you have in your account. I was not allowed to put another in.. had to remove the old one first.