CTFC and 'manipulation'

[gentlemand]

https://cointelegraph.com/news/all-of-top-100-cryptocurrencies-see-red-amidst-cftc-price-manipulation-probe

Off they go with their noble probe.

Since it's screamingly obvious to everyone that all crypto markets are outrageously rigged and always have been, what is a possible outcome?

How do you link the intentions of a trade to a person? What's to say that spoofy wall wasn't pulled because you suddenly needed the money for your Komodo dragon's ransom?

Is this a shot across the bows or will they try and track some people down? And since when did all this theoretically become against the law.

The stupidest thing of all is that they haven't subpoenaed Bitfinex which is where everyone else still follows even if it doesn't fall within the CBOE basket.

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[richardsNY]

It's impossible to prove that the market was subject to manipulation, regardless of how obvious it may have been, and the CFTC knows that. It's nothing more than a form of power play to show that they are 'guarding' the market for your well-being. It's like a dog barking, but when you come closer that dog ain't doing shit. They even have a page on their site where they gloriously praise crypto currencies. Can it be more contradicting? Regarding Bitfinex, that exchange is what mob boss John Gotti was back in the days, a teflon don. That exchange with its Tether time bomb somehow manages to avoid regulators like it's nothing. Very weird indeed.

[figmentofmyass]

https://cointelegraph.com/news/all-of-top-100-cryptocurrencies-see-red-amidst-cftc-price-manipulation-probe

Off they go with their noble probe.

Since it's screamingly obvious to everyone that all crypto markets are outrageously rigged and always have been, what is a possible outcome?

How do you link the intentions of a trade to a person? What's to say that spoofy wall wasn't pulled because you suddenly needed the money for your Komodo dragon's ransom?

i think they just need to show a pattern of conduct to prove intent. no one's getting charged over posting and pulling an order one time. but if you post thick orders and the vast majority of your trading activity is just spoofing without trading, it's gonna look pretty bad, don't you think?

some anti-spoofing cases from earlier this year: https://www.cftc.gov/PressRoom/PressReleases/pr7681-18

Is this a shot across the bows or will they try and track some people down? And since when did all this theoretically become against the law.

i think it's a scare tactic to scare the market into line through self-regulation. but if i put my tin foil hat on, i could think of some more sinister things going on here.

according to the above press release, the Commodity Exchange Act includes a prohibition against spoofing (not sure on the specifics).

The stupidest thing of all is that they haven't subpoenaed Bitfinex which is where everyone else still follows even if it doesn't fall within the CBOE basket.

they definitely have jurisdiction over exchanges that are used to price regulated futures markets. not sure it extends any further than that.

[gentlemand]

according to the above press release, the Commodity Exchange Act includes a prohibition against spoofing (not sure on the specifics).

What I'm particularly intrigued by is that they seemingly declared out of nowhere that crypto now fell under this regulation so tough titty.

I don't recall any consultations or warnings. I don't recall any exchange warning me about not doing it, though no doubt it's now buried in a couple of terms and conditions. Flat out manipulation has been such a long standing tactic that I'm pretty amazed it's suddenly been declared a shocker when it was the cornerstone of everything for so long.

You'd expect at least a transition period and a non manipulation 101 when you sign in to your fave exchange.

[exstasie]

What I'm particularly intrigued by is that they seemingly declared out of nowhere that crypto now fell under this regulation so tough titty.

I don't recall any consultations or warnings. I don't recall any exchange warning me about not doing it, though no doubt it's now buried in a couple of terms and conditions. Flat out manipulation has been such a long standing tactic that I'm pretty amazed it's suddenly been declared a shocker when it was the cornerstone of everything for so long.

You'd expect at least a transition period and a non manipulation 101 when you sign in to your fave exchange.

I've always known in the back of my mind they might exercise this kind of authority. But I agree, it's surprising given what they've said in the past:

Market participants should take note that the relatively nascent underlying cash markets and exchanges for bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority. There are concerns about the price volatility and trading practices of participants in these markets. We expect that the futures exchanges, through information sharing agreements, will be monitoring the trading activity on the relevant cash platforms for potential impacts on the futures contracts’ price discovery process, including potential market manipulation and market dislocations due to flash rallies and crashes and trading outages.

From what I'm reading, those information sharing agreements were inadequate (to CME's liking), since CME couldn't force the exchanges to provide trading data for such an investigation in January. Apparently, the CFTC took an interest after the exchanges refused to comply with CME's requests. (apparently a dumb move)

Jesse Powell's complaints sort of tell me these exchanges didn't totally think through their participation in these indices. We're in the big leagues now......

[eminemcookie]

Manipulation has always been prevalent in some degree and it's always technically been against the law. It's just never come in to any sort of consideration until now. I also would be willing to bet that nothing will come of it, worst case scenario even if it's glaringly obvious it will be used as a kind of warning and a sign that if anything happens in the future then action will be taken. Anyone pleading that they didn't know manipulation was not lawful will be left without a leg to stand on because it's such common knowledge and especially for people in positions of such power.

[pooya87]

i honestly never understand how they can prove this kind of manipulation. we all know that it exists and  we have all seen it in different forms such as fake walls that are placed to create illusions of sell pressure or buy support. but they are real orders with real funds and there always is a plausible deniability to it, even if your history is filled with this kind of orders.
also i believe exchanges don't keep not-closed order history! so they may not even have a history of these walls that are never filled.

[davis196]

I wish the CTFC to conduct a mandatory survey among all the crypto traders on the big crypto exchange platforms.In this survey,they have to ask questions like:
1.Do you feel that the crypto markets are manipulated?
2.Do you trust the exchange platform/s you are using for crypto trading?
3.Do you think that the big crypto exchange platforms manipulate their trading volume data?
This won`t prove anything about market manipulation,but it would be interesting to have such information.

[Wind_FURY]

They should start in their own backyard first before they interfere in markets that they might not have any jurisdiction on. I believe this is another try for the CFTC to spread FUD and to signal their relevance, which is falling.

[Pursuer]

I wish the CTFC to conduct a mandatory survey among all the crypto traders on the big crypto exchange platforms.In this survey,they have to ask questions like:
1.Do you feel that the crypto markets are manipulated?
2.Do you trust the exchange platform/s you are using for crypto trading?
3.Do you think that the big crypto exchange platforms manipulate their trading volume data?
This won`t prove anything about market manipulation,but it would be interesting to have such information.

there is no need for conducting such experiments to know the result. I can tell you the answers right now.
all three questions have YES for their answers. not because manipulation exists but because people always want to blame things they don't understand on others and what better to blame as "manipulators" whether it is some whales or the exchanges themselves. as I said this has nothing to do with actual manipulation for example when the correction happens after a rise everyone starts saying it was "whales" who dumped! and specially these days that price is going down and not up to their dream prices everyone is seeing manipulation on every corner.

[TheQuin]

i honestly never understand how they can prove this kind of manipulation. we all know that it exists and  we have all seen it in different forms such as fake walls that are placed to create illusions of sell pressure or buy support. but they are real orders with real funds and there always is a plausible deniability to it, even if your history is filled with this kind of orders.
also i believe exchanges don't keep not-closed order history! so they may not even have a history of these walls that are never filled.

What makes it really difficult to enforce is the need to prove intent. Everyone is allowed to change their mind and pull an order. Even doing it frequently doesn't prove someone was actually never intended the order to get filled. If you watch the order books on the futures markets you'll see spoofing occur in real time all day long and the CTFC will never do anything about it.

The only one I can remember getting any punishment was just unlucky that he accidentally caused a flash crash and they needed a scapegoat.

https://www.telegraph.co.uk/finance/financial-crime/11553433/British-trader-Nav-Sarao-charged-with-triggering-global-markets-flash-crash-in-2010.html

I think that's what is going on here. The CTFC is just making a statement and letting the crypto exchanges know who is boss.

[eminemcookie]

i honestly never understand how they can prove this kind of manipulation. we all know that it exists and  we have all seen it in different forms such as fake walls that are placed to create illusions of sell pressure or buy support. but they are real orders with real funds and there always is a plausible deniability to it, even if your history is filled with this kind of orders.
also i believe exchanges don't keep not-closed order history! so they may not even have a history of these walls that are never filled.

What makes it really difficult to enforce is the need to prove intent. Everyone is allowed to change their mind and pull an order. Even doing it frequently doesn't prove someone was actually never intended the order to get filled. If you watch the order books on the futures markets you'll see spoofing occur in real time all day long and the CTFC will never do anything about it.

The only one I can remember getting any punishment was just unlucky that he accidentally caused a flash crash and they needed a scapegoat.

https://www.telegraph.co.uk/finance/financial-crime/11553433/British-trader-Nav-Sarao-charged-with-triggering-global-markets-flash-crash-in-2010.html

I think that's what is going on here. The CTFC is just making a statement and letting the crypto exchanges know who is boss.

Entirely agree, the CFTC if just throwing their weight around a little to try and strike some fear in to the exchanges and traders. I'd be very surprised if there isn't at least some record of what orders are placed and then pulled, i know Binance tracks this (because you can see it within your account) so I imagine others do too. If they also track the timing of this and the price/depth of the market at the time it is placed and pulled is another thing.

[RejectedBanana]

From what I understand, the CFTC probe is focusing on a very narrow window of time with a very few number of exchanges.

They've chosen the very first January futures contract settlement date for exchanges with a heavy presence in the US: Bitstamp, Coinbase, itBit and Kraken.  Bitfinex is already under CFTC investigation for ties to Tether.

This is a shot across the bow. They will likely dole out some heavy handed punishment to the unlucky few to make an example and put the fear into everyone else under their jurisdiction.

I can't but help see this as good news long term if not painful short term. This is all part of the legitimization process to clear the way for institutional money via regulated exchanges.

If these few fintech startups can't clean up their act, the established, regulated brokers such as Fidelity, Goldman, and JP Morgan will be more than happy to pick up where they've left off.

In fact, I think the CFTC is acting as the established good ol' boys' guard dog, clearing the way for Wall St. to take over.

We are witnessing a changing of the guard. Exchange volumes are way down, but apparently OTC volumes are at record levels.

We are shifting from small-time retail investors on unregulated, shadowy exchanges to regulated, institutional, and largely behind the scenes dealings involving a whole other level of capital.

These Wall St. brokers and investors know how to bend government rulings to their liking.

[adaseb]

I haven't really looked into the contracts that expired last month and the month before but I remember that the first CBOE contract that expired based on the Gemini price at 4PM was subject to manipulation.

I don't have 1M chart data but if you look at when that future contract expire you will see there was a huge volume spike and price barely moved. Suggesting that someone tried to manipulate the price that the futures would expire at.

I haven't checked the data for the contracts that expired after December but I am pretty sure it was no different. The reason why its easy to manipulate is because there is very thin liquidity in the markets at the moment.

This doesn't bode well at all for the ETF, and will provide a huge pitfall that BTC will have to overcome to get listed.

[talkbitcoin]

i honestly don't think anybody cares about CTFC and their probes of manipulation at all. because if they gave a rats ass then they wouldn't have manipulated bitcoin price further and price wouldn't have dropped this low. but the reality is that they continue their manipulation without even slowing it down.

[figmentofmyass]

I haven't really looked into the contracts that expired last month and the month before but I remember that the first CBOE contract that expired based on the Gemini price at 4PM was subject to manipulation.

I don't have 1M chart data but if you look at when that future contract expire you will see there was a huge volume spike and price barely moved. Suggesting that someone tried to manipulate the price that the futures would expire at.

my understanding from the CBOE contract specs is that the settlement price is based on the daily auction price, not the spot exchange price. i think the only data we have is the final auction price and volume.

I haven't checked the data for the contracts that expired after December but I am pretty sure it was no different. The reason why its easy to manipulate is because there is very thin liquidity in the markets at the moment.

This doesn't bode well at all for the ETF, and will provide a huge pitfall that BTC will have to overcome to get listed.

yeah it seems too easy to manipulate since liquidity is so low. i don't know how the auctions on gemini work exactly, but i imagine if volume is low that large market orders in front of settlement will push the benchmark one way or the other.

it makes more sense to use a basket/index for this.

[gentlemand]

https://www.nytimes.com/2018/06/13/technology/bitcoin-price-manipulation.html?partner=IFTTT

Hey look, it's more Tether fun for all the family. I stopped bothering paying attention to USDT and accepted it as a fact of life long ago.

[TheQuin]

Hey look, it's more Tether fun for all the family.

Having read the article it appears they looked at the blockchain to see when large quantities of USDT flowed into exchanges. They then noticed that was when the price of BTC had decreased (a good buying opportunity). The price of BTC then went up because of the buying. What they don't explain is how they conclude that it was manipulation rather than just large players buying the dips in a bull market.

[gentlemand]

Having read the article it appears they looked at the blockchain to see when large quantities of USDT flowed into exchanges. They then noticed that was when the price of BTC had decreased (a good buying opportunity). The price of BTC then went up because of the buying. What they don't explain is how they conclude that it was manipulation rather than just large players buying the dips in a bull market.

The perception of Tether always seemed to be more than a little simplistic to me. However at this stage of the game any excuse to fall will be grabbed with both hands and even if this proves nothing, and it doesn't, it might be enough to inspire more dumpage.

[TheQuin]

it might be enough to inspire more dumpage.

I think we tend to overestimate the importance of things like this. The forum, Reddit and a few Twitter feeds can be a bubble where these things are discussed endlessly but outside of that bubble they have very little impact. I don't think the big money players that drive the markets or the hoards of new players that came in last year really see much of that stuff.
Just look at all the Tether stories that happened during the bull run that had no influence on stopping it. The theory was the bull run would come to an end when Tether blew up. That didn't happen, the cycle just ended naturally.