Mysterious Trader With “Nearly Unlimited Bankroll” Said To Manipulate, Dominate Price Of Bitcoin

It was over three years ago, back in May 2014, when we wrote “How Bots Manipulated The Price Of Bitcoin Through “Massive Fraudulent Trading Activity” At MtGox” in which we first demonstrated one of the more striking observed “bot-driven” bitcoin manipulation schemes, in this case related to the infamous collapse of the now defunct Mt.Gox bitcoin exchnage.

As we wrote at the time, a number of traders began noticing suspicious behavior on Mt. Gox. Basically, a random number between 10 and 20 bitcoin would be bought every 5-10 minutes, non-stop, for at least a month on end until the end of January, by what appeared to be two algos, named later as “Willy” and “Markis.” Each time, (1) an account was created, (2) the account spent some very exact amount of USD to market-buy coins ($2.5mm was most common), (3) a new account was created very shortly after. Repeat. In total, a staggering ~$112 million was spent to buy close to 270,000 BTC – the bulk of which was bought in November.

“So if you were wondering how Bitcoin suddenly appreciated in value by a factor of 10 within the span of one month, well, this is why. Not Chinese investors, not the Silkroad bust – these events may have contributed, but they certainly were not the main reason. But who did it? and why?”

Of course, in the end this alleged manipulation did not help Mt.Gox which eventually collapsed in what has been the biggest case of cryptocoin fraud in history.

We bring up this particular blast from the past, because in the latest case of bitcoin market abuse – with Bitcoin trading at all time highs above $3,000 – Cointelegraph reports of rumors swirling about a trader “with nearly unlimited funds who is manipulating the Bitcoin markets.” This trader, nicknamed “Spoofy,” received his “nom de guerre” because of his efforts to “spoof” the market, primarily on Bitfinex.

Of course, spoofing is what Navinder Sarao pled guilty of last year, when regulators inexplicably changed their story, and instead of blaming a Waddell and Reed sell order for the May 2010 flash crash, decided to scapegoat the young trader who allegedly crashed the market due to his relentless spoofing of E-mini futures (and also making $40 million in the process of spoofing stock futures for over five years).

It now appears that a spoofer has once again emerged, only this time in Bitcoin.

For those unfamiliar, spoofing is simple: it is the illegal practice of placing a large buy order just below other buy orders, or a large sell order just above other sell orders, then cancelling if it appears that the order is about to be hit or lifted. The idea is to make traders think that somebody with deep pockets is getting ready to buy or sell, in hopes of moving the market. If traders see a sell order of 2000 Bitcoin they may rush to panic sell before the whale crashes the price. And vice versa on the bid-side.

As an example of Spoofy’s trading pattern, here is a breakdown of a typical “trade” by the mysterious entity as noted by BitCrypto’ed who first spotted the irregular activity: Spoofy is a regular trader (or a group of traders) who engages in the following practices:

  • Places large bids ($2 million and up) for Bitcoin, usually just under a smaller bid order, only to remove them once someone starts to sell. These orders usually have a lifetime of minutes, or sometimes as short as 5–10 seconds to manipulate the price up (more common)
  • Places large asks ($2 million and up), for Bitcoin when he wants the price to go down, or stop going up (less common)
  • Occasionally ‘Spoofy’ will allow orders deep in the orderbooks to remain for a few hours, usually $50–$100 below the current price. For example, during the recovery above $2,000, he had roughly 4,000 BTC of false orders in the $1,900 range that were unlikely to execute, and ultimately were never executed.

As noted above, spoofing is actually illegal – as ultimately the trader has no intention of ever executing the publicized trade – but as Bitcoin markets are largely unregulated, it’s a very common practice.

What is unusual in this case is the nearly unlimited bankroll that Spoofy has at his disposal: He regularly places orders approaching $60 million.

Even more unusual is that, as cointelegraph reports, most of Spoofy’s activity occurs on a single exchange: Bitfinex. This exchange came under fire earlier this spring when Wells Fargo cut off their banking ties. As a result, it’s virtually impossible to deposit fiat on Bitfinex without going through intermediaries.

Yet unlike most Bitfinex traders, Spoofy appears to have special privileges, and has massive sums of both fiat and Bitcoin at his disposal on that exchange, likely one of the only traders who does.

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In addition to spoofing, “Spoofy” also engages in wash trading, or effectively trading with himself. As BitCrypto’ed points out in a recent blog post:

“Spoofy makes the price go up when he wants it to go up, and Spoofy makes the price go down when he wants it to go down, and he’s got the coin… both USD, and Bitcoin, of course, to pull it off, and with impunity on Bitfinex.”

The BitCrypto’ed blog also describes Spoofy’s wash trades, when he trades with himself by either selling into his own buy orders or vice versa. Wash trading at high volumes can induce a frenzy of buying or selling, as other traders respond to the high trading volume. Spoofy can execute wash trades at very low cost, about $1,000 per million dollars of volume.

A single entity (entity could be a trader, or a group of traders), single handedly wash traded 24,000 Bitcoins in shorts. In order to do this, you would need to have at least 24,000 BTC on Bitfinex and the USD to buy them with.

When Bitfinex announced its plan to distribute Bitcoin Cash, it initially planned to distribute Bitcoin Cash to holders of short positions. Immediately following that announcement, a single trader short sold tens of thousands of Bitcoin all at once. It’s likely this trader was Spoofy himself, hoping to acquire as much Bitcoin Cash as possible.

The large number of shorts on Bitfinex also led many to believe that an epic short squeeze was coming, and many Bitcoin traders purchase coins in expectation of this. Suddenly, he “claimed” all of his own shorts, closing them using his own Bitcoin. The number of shorts dropped drastically, yet without affecting the price at all.

Bifinex itself admitted the manipulation on August 2, one day after the fork:

“After the methodology announcement on July 27th, several accounts began large-scale manipulation tactics in an attempt to obtain BCH tokens at the expense of exchange longs and lenders on the platform, causing the distribution coefficient to artificially plummet.

 

We have determined that this kind of manipulation?—?including wash trading and self-funding shorts?—?is in violation of Bitfinex’s terms of service. Those who intended to take unfair advantage of the circumstances surrounding the BCH distribution at the expense of other users have been sanctioned accordingly.”

Interestingly, BitCrypto’ed claims that Spoofy isn’t limited to just Bitcoin, and that shortly after this ‘trader’ was ‘sanctioned’ by Bitfinex, another interesting thing happened: ETCBTC shorts immediately disappeared on August 1.

 

Here we can see how the ETCBTC shorts simply vanished, from 60,000 ETC short, to a low of 93 ETC. But let’s not just look at ETCBTC, what about ETCUSD?

 

 

 

A giant middle finger. Notice the dramatic increase and decrease in longs with no effect on price.

 

I’m not sure what to make of these, but it calls into question the legitimacy of this data. The point I’m trying to make by showing the ETCBTC/ETCUSD margin pairs also engaging in very funny business at the same exact time, how are we supposed to know that the BTCUSD longs on Bitfinex are not also subject to this manipulation?

 

ETCBTC Shorts = Clear evidence of manipulation
ETCUSD Longs =Clear evidence of manipulation
BTCUSD Shorts = Clear evidence of manipulation (and admitted by Bitfinex)
BTCUSD Longs = BTCUSD Longs in terms of USD, has never been higher in Bitfinex’s history. See the green line.

 

It’s not just Bitfinex: Spoofy’s activity also drives crypto prices on other exchanges, as arbitrage takes place. Because BItcoin is so thinly traded, a single large “whale” can potentially move the entire market.

Just like in US stock markets where HFTs find instant price arbitrage opportunities, with the help of extensive spoofing, the same takes place in bitcoin exchange.

People underestimate how much exchanges follow each other. Manipulation on one exchange will affect prices on other exchanges. You have traders that watch all of the exchanges and if one exchange starts to pull ahead, they too buy on cheaper exchanges.

 

You don’t just have people, but you also have bots that will do the same thing, so price reactions can be immediate.

Just like equities. And while Spoofy is certainly exercising outsized control over the Bitcoin price, it is uncertain how much of an affect this is having across all the markets. The price is currently rising, having finally surmounted the $3,000 barrier. The only problem? Nobody knows how much of this increase is organic and sustainable, and how much is due to the market manipulation of Spoofy and others.

Finally, nobody knows who he is:  The identity of Spoofy remains a mystery. He may be i) a single trader, ii) a large OTC trading firm or group of colluding traders, iii) or even the Bitfinex management themselves. He sometimes seeks to drop Bitcoin price, and sometimes acts to increase it. One thing is certain: one single trader seems to have a “central bank”-like impact on the entire crypto market.

France: Churches Vanish, Mosques Spring Up

Authored by Giulio Meotti via The Gatestone Institute,

  • In the last 30 years, more mosques and Muslim prayer centers have been built in France than all the Catholic churches built in the last century.
  • The Church of Santa Rita used to stand in the fifteenth arrondissement of Paris. A few weeks after Father Hamel was murdered by Islamic terrorists, the French police cleared the church. It is now a parking lot. Police dragged the priests out by their legs as a Mass was being celebrated.
  • In France there are laws protecting old trees. But the state is free to flatten old Christian churches. The vacuums created in the French landscape are already being filled by the booming mosques. Cowardly French authorities would never treat Islam as they are now treating Christianity.

"France is not a random space… fifteen centuries of history and geography determined its personality. Inscribed in the depths of our landscape, the churches, the cathedrals and other places of pilgrimage give meaning and form to our patriotism. Let us demand our civil authorities to respect it". Two years ago, the French journalist Denis Tillinac promoted this appeal, signed by dozens of French personalities, after some French imams requested the conversion of abandoned churches into mosques.

A year later, terrorists who pledged allegiance to the Islamic State assaulted the Catholic parishioners in the church of Saint-Étienne-du-Rouvray, murdering an elderly priest, Father Jacques Hamel, at the foot of the altar. An outpouring of great emotion followed the most serious attack on a Christian symbol in Europe since the Second World War.

After that attack, the French authorities prevented many Islamist plots against the Notre Dame Cathedral in Paris. Last June, police shot a Muslim man outside the cathedral after he tried to attack them with a hammer. Another terror cell of French women, guided by Islamic State commanders in Syria, had previously been foiled before they could attack Notre Dame. France's most famous Catholic house of worship is a prime target for the jihadists. A t the same time, France has been dismissing the religious and cultural heritage of France's Catholic patrimony, which, in a time of religious clashes and revival, should instead be protected as treasures and sources of strength.

Last month, around the time of the first anniversary of the murder of Father Hamel, a wrecking crew demolished the famed Chapel of Saint Martin in Sablé-sur-Sarthe, built in 1880-1886 and deconsecrated in 2015. A parking lot will replace the old Christian building. Photographs and videos posted on social networks, in scenes reminiscent of ISIS' vandalism of churches in Mosul, show the cross being ripped from the church and the church destroyed. A few days earlier, in Rouen, not far from where Father Hamel had been killed, the local authorities ordered the destruction of the Saint-Nicaise Church's presbytery, for "safety reasons".

The Chapel of Saint Martin in Sablé-sur-Sarthe, France, pictured shortly before it was demolished on July 17, 2017. (Image source: Simon de l'Ouest/Wikimedia Commons)

In 1907, the French state appropriated all church property, and now an increasing numbers of local authorities are deciding they cannot or will not renovate their churches. French mayors call this process "deconstruction".

The year of Father Hamel's martyrdom, France was very busy demolishing churches. The Patrimoine-en-blog website, a platform providing a regular inventory of demolished churches, reports seven demolished churches in France in 2016 alone, and two in the first half of 2017. Along with these destroyed Christian buildings, 26 churches were put up for sale in 2016, and 12 churches were listed for sale in 2015. In 2017, many churches were converted to offices, apartments, "entertainment centers", gyms and art galleries.

The picture is not promising for French Catholicism:

"Over the past two years, Christian associations have sold nearly 40 churches throughout the country, at prices ranging from 100,000 to 400,000 euros. Twenty-seven other churches have been demolished. According to the Catholic Church, more than 1,000 churches are to be sold or demolished throughout France".

According to a report from the Observatory of Religious Heritage, presented at the French Senate, France could lose "5,000 to 10,000 religious buildings by 2030". Every year, 20 churches are sold and converted in France. The art historian Didier Rykner, who runs La Tribune de l'Art, said that "not since the Second World War have we seen churches reduced to rubble".

These authorities and mayors, so lenient when it comes to presenting economic reasons for destroying churches, are always generous when it comes to mosques. "Nearly 2,400 mosques today, compared to 1,500 in 2003, is the most visible sign of the rapid growth of Islam in France, a consequence of a population of immigrant origin and the process of strong re-Islamization", noted an report by the magazine Valeurs Actuelles.

When it comes to Islam, neutrality is abandoned. For example, "the municipality of Évreux voted for the provision of 5000 square-meters of land, for one symbolic euro, for the project of the Union of the Muslim Faith". The author and journalist Élisabeth Schemla detailed how French mayors have become "builders of mosques". This is how, in the last 30 years, more mosques and Muslim prayer centers have been built in France than all the Catholic churches built in the last century.

The Church of Santa Rita used to stand in the fifteenth arrondissement of Paris. A few weeks after Father Hamel was assassinated by the Islamic terrorists, the French police cleared the church. It is now a parking lot. Police dragged out the priests by their legs as a Mass was being celebrated. "When France is moved by the martyrdom of Jacques Hamel and [then Prime Minister] Manuel Valls speaks of financing mosques and training imams, we do not understand that churches are abandoned to their sad fate and demolished", Eloise Lenesley wrote at the time in Le Figaro.

In France, there are laws protecting old trees from indiscriminate cutting. But the state is free to flatten old Christian churches. The vacuums created in the French landscape are already being filled by the booming mosques.

Cowardly French authorities would never treat Islam as they are now treating Christianity. Marine Le Pen pointedly asked: "What if we built parking lots on top of Salafist mosques, instead of our churches?"

The Cost Of Light Through The Ages

"Could all historians (and economists) please just turn their attention away for a short moment?! " asks Der Spiegel's Guido Mingels, as he reflects on the evolution in the costs of making light work through the ages (spoiler alert – it appears deflation is a 'good' thing).

Let's talk straight: All man had achieved before 1800 isn't really worth mentioning. Easy peasy stuff. For thousands of years nothing really happened.

These days, you visit a museum and are expected to marvel at an ancient plow or a knight's armor, when back then they didn't even have electric lighting. No switch, anywhere!

The history of artificial lighting accompanies and enlightens the Anthropocene, as some call the times from the year 1800 onwards, when mankind started showing off what its real capabilities were. Without light in the coal pits and in the factories, which from then on could be lit at all times, the industrial revolution would have had to have been postponed.

The costs for the production of light, one of the most important enablers of progress, have dropped in a way that is hardly imaginable. The environmental economists Roger Fouquet and Peter Pearson have retraced this development for England.

Infographic: The Cost of Light Through the Ages | Statista

You will find more statistics at Statista

One hour of light (referred to as the quantity of light shed by a 100 watt bulb in one hour) cost 3200 times as much in 1800 in England than it does today, amounting to 130 euros back then (or a little more than 150 dollars).

In 1900, it still cost 4 euros (close to 5 dollars).

In the year 2000, we arrived at a cost of 4 euro cents (5 U.S. cents).

You can also put this into relation with the amount of time that an average worker needed to labor during different ages in order to earn enough for the 100 watt bulb to glow for an hour – just like the economist William Nordhaus has done in one of his classic essays.

The people of Babylon, in 1750 B.C., who used sesame oil to light the lamps, had to work for 400 hours to produce the said amount of light.

Around 1800, using talcum candles, 50 hours needed to be invested.

Using a gas lamp in the late 19th century, 3 hours were due.

Using an energy saving bulb today, you will have to work for the blink of an eye – a second.

*  *  *

The chart and text were first published by German journalist and author Guido Mingels. It is available as a book here. As always, our charts are free to use and share, just quote DER SPIEGEL/Statista as the source and include a backlink to the graphic's URL (this page).

Imperial Folly Brings Russia And Germany Together

Authored by Pepe Escobar via InformationClearingHouse.info,

The Empire of Whiners simply can't get enough when it comes to huff, puff and pout as the Empire of Sanctions.

With an Orwellian 99% majority that would delight the Kim dynasty in North Korea, the "representative democracy" Capitol Hill has bulldozed its latest House/Senate sanctions package, aimed mostly at Russia, but also targeting Iran and North Korea.

The White House's announcement – late Friday afternoon in the middle of summer – that President Trump has approved and will sign the bill was literally buried in the news cycle amidst the proverbial 24/7 Russia-gate related hysteria.   

Trump will be required to justify to Congress, in writing, any initiative to ease sanctions on Russia. And Congress is entitled to launch an automatic review of any such initiative.

Translation; the death knell of any possibility for the White House to reset relations with Russia. Congress in fact is just ratifying the ongoing Russia demonization campaign orchestrated by the neocon and neoliberalcon deep state/War Party establishment.

Economic war has been declared against Russia for at least three years now. The difference is this latest package also declares economic war against Europe, especially Germany.

That centers on the energy front, by demonizing the implementation of the Nord Stream 2 gas pipeline and forcing the EU to buy US natural gas.

Make no mistake; the EU leadership will counterpunch. Jean-Claude Juncker, president of the European Commission (EC), put it mildly when he said, "America first cannot mean that Europe's interests come last."

On the Russia front, what the Empire of Sanctions faces does not even qualify as a hollow victory. Kommersant has reported that Moscow, among other actions, will retaliate by banning all American IT companies and all US agricultural products from the Russian market, as well as exporting titanium to Boeing (30% of which comes from Russia).

On the Russia-China strategic partnership front, trying to restrict Russia-EU energy deals will only allow more currency swaps between the ruble and the yuan; a key plank of the post-US dollar multipolar world.  

And then there's the possible, major game-changer; the German front.

The Fools on the Hill

Even without considering the stellar historical record of Washington not only meddling but bombing and regime-changing vast swathes of the planet — from Iraq and Libya to the current threats against Iran, Venezuela and North Korea — the Russia-gate hysteria about meddling in the 2016 US presidential election is a non-story, by now thoroughly debunked.

The heart of the matter is, once again, energy wars.

According to a Middle East-based US energy source not hostage to the Beltway consensus, "the message in these sanctions is the EU has no future unless it buys US natural gas to cut out Russia. To deny Russia the natural gas market of the EU was the goal behind the just lost war in Syria to put the Qatar-Saudi Arabia-Syria-Turkey-EU pipeline in and the opening to Iran for an Iran-Iraq-Syria-Turkey-EU pipeline. None of these plans worked."

The source adds as evidence the 2014 oil price war against Russia, orchestrated by "the dumping of Gulf States' surplus oil or reserve capacity on the world market. Since this has failed to bring Russia to its knees, the destruction of the Russian natural gas market in the EU has become a national priority for the United States."

As it stands, 30% of all EU oil and natural gas imports come from Russia. In parallel, the Russia-China energy partnership is being progressively enhanced. Russia is already geared to increase oil and gas exports to China and Asia as a whole.

The leadership in Berlin is now convinced that Washington is jeopardizing Germany's energy diversification/energy security via the  sanctions war. Russian natural gas and oil is secured by overland routes and is not dependent on the oceans, which, as the energy source stresses, "are no longer under United States control. If Russia in response to United States belligerency drops an Iron Curtain over Europe, and redirects all its natural gas and oil exports to China and Asia, Europe will be utterly dependent on largely insecure sources of natural gas and oil such as the Middle East and Africa."

And that bring us to the "nuclear" possibility in the horizon; a Germany-Russia alignment in a Reinsurance Treaty, as first established by Bismarck. CIA-related US Think Tankland is now actively discussing the possibility.    

Another US business/political source, also a practitioner of thinking outside the (Beltway) box, stresses, "this is what it's all about. That is the true goal of Russia, and the United States has fallen into the trap. The United States has had enough of Germany and what it considers dumping of German products on the United States through rigged currency. They are now threatening Germany with sanctions, and there is nothing Germany can do with the EU on their back facing vetoes from Poland, who is giving them trouble once again. The fools in Congress are really going after Germany, and throwing Germany in the arms of Russia."

The US as the New Carthage

A possible Germany-Russia alliance, as I've written before, rounds up the China/Russia/Germany entente capable of reorganizing the entire Eurasian land mass.

The Russia-China strategic partnership is extremely attractive to German business, as it smoothes access via the Belt and Road Initiative (BRI). According to the business/political source,

"the US is at war with China and Russia (but not Trump, our President) and Germany is having second thoughts about being nuclear cannon fodder for the US.

 

I have discussed this in Germany, and they are thinking of renewing the Reinsurance Treaty with Russia.

 

No one trusts this US Congress; it is considered a lunatic asylum. Merkel may be asked to leave for the leadership of the UN, and then the treaty would be signed. It will shake the world and end any thought of the United States being a global power, which it isn't anymore."

The source adds, half in zest, "we think that Brzezinski died under the pressure of the realization that this was coming and that all his hatred of Russia and his life work to destroy them was becoming utterly undone."

So, in a sense, it's "welcome to the 1930s all over again and the rise of nationalism in Europe. This time Germany will not make the mistakes of 1914 and 1941 but will stand against their traditional Anglo-Saxon enemies. The United States has truly become today's Carthage and the disorder in Congress reflects the same stupidity of Carthage facing Rome. Legislators undermined their genius Hannibal as they are undermining the greatest president of the United States since Andrew Jackson. As Sophocles wrote in 'Antigone', 'God first makes mad those he wishes to destroy.' This Congress is mad."