during the 2 mo i pounded on Zhou's ass during Oct-Nov, i kept identifying red flags everywhere. the way he had set things up was flawed from the beginning. i pointed out problems like "slippage" with mtgox. anytime he had to hedge an already executed customers order and got delayed due to a bad connection with mtgox i'm sure it set him up for a catastrophic loss. i told him i could set up accts at both places and short and buy simultaneously to "frontrun" his hedging. i could tell by his lack of response or immature responses that he was thinking about what i was saying and then he would change his algorithm suddenly. this was a huge red flag and from that point on i knew i had him. interspersed throughout this time, small outbursts and screams would occur from customers complaining about being Zhoutonged (another term i coined) from a malfunction of his algorithm. in response he would change the algorithm yet again, apologize, say a few nice things, and reimburse customers which again is a huge red flag of someone trying to perpetuate the ponzi. Zhou kept changing his stories and explanations. he writes a ton but says very little.
then there was the time when Zhou publicly came out and tried to influence the market by stating that there were no more USD reserves and that it would be a good time to sell BTC. oh i pounded his ass good for that one and he finally apologized. what owner of an exchange attempts to influence the market direction unless it benefitted himself in some way? i could tell that the whipsaws and volatility were costing him and customers money yet the Zhoutonging continued. this was his way of stripping money at customers expense. he actually had to to stay profitable.
and then the culmination of my efforts came from the "double ramp" (my term) from $3.50-$4.90 in a couple of minutes that i personally orchestrated. if you'll remember that down in the dumps of those times it had become fashionable to short every ramp with leverage from Zhou as inevitably the price would turn back down and go lower. the Bears were making money like crazy doing this and were partying it up. I had already helped turn the tide @ $2 by being over a third of that bid wall and i could see the trend had changed to upwards but the Bears didn't see it and were still shorting each ramp. so i waited for someone else to perform the first ramp from $2.90 to $3.90 or so (fuzzy on the exact start price). the Bears predictably came in shorting with leverage and the price came back in to $3.50. and then i hit the BUY button with a massive order. i'm sorry but i smiled big as the price took off up to $4.90 and the screams from the Bears was loud, clear and palpable. there was blood everywhere. so many ppl got Zhoutonged from that one. see the problem with his setup was that his algo, the way it was written, was hyperreactive to those buying spikes madly trying to hedge while buyers madly tried to buy while shorts madly tried to cover while everyone else was being Zhoutonged. it was beautiful.
in the end, nobody listened and i gave up taking criticism from everyone for attacking a 17 yo, especially from the Bears defending Zhou. God bless them. may they rest in peace.