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U.S. Launches Criminal Probe into Bitcoin Price Manipulation

bloomberg.com

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Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#61

Post by nonbel »

>"The Justice Department has opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies, dramatically ratcheting up U.S. scrutiny of red-hot markets that critics say are rife with misconduct, according to four people familiar with the matter. [...] Federal prosecutors are working with the Commodity Futures Trading Commission, a financial regulator that oversees derivatives tied to Bitcoin, the people said."

Why isn't there a better source for this than "four people"? I didn't see anything on the DOJ site. Perhaps they are talking about this: https://www.cftc.gov/PressRoom/PressReleases/7731-18

However, that doesn't mention the DOJ so maybe not. Is it normal for the DOJ to anonymously report its activities to journalists like this?

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#62

Post by Retric »

TangoTrotFox wrote: post #53
Retric wrote: post #15

Earlier quoted context omitted.

Due to centralization of hardware the Chinese government can trivially do a 51% attack. That's a form of centralization your ignoring due to an overly specific definition. The tiny block size is arguably an ongoing 51% attack from an oligarchy that is in collusion. Again, depending on what you consider centralization having a tiny group that's in direct communication easily qualifies. Pas: In your example if the only…

51% attacks are mostly overblown. If a group decides to engage in a 51% attack, all they are doing is effectively revoking their own license to print money - which is what having a > 51% mining capacity in a major crypto translates to. Bitcoin is a public ledger and double spend transactions would be completely visible to all. All this means is that the coin would end up getting forked, similar to what happened when…

This assumes the entity wants Bitcoin to survive. The Chinease government has zero intrest in keeping Bitcoin alive and would happily kill it off.

Forks don't help with 51% attacks as the attacker can continue to use their hardware on the fork. Further, you can use a proxy to hid the origin of a block, so Bitcoin would need to move to a new hash which would take a long time and prevent any obvious successor.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#63

Post by hapnin »

kevingadd wrote: post #57
danharaj wrote: post #48

Earlier quoted context omitted.

Banks don't pretend that they're not fractional reserve.

Fractional reserve is also regulated and deposits are insured up to a certain amount, so it's definitely not comparable to printing imaginary USDT - even if fractional reserve banking has many well-known issues.

That regulation didn't work so well 10 years ago. Regulation is for us, not the big dogs.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#64

Post by jnwatson »

hapnin wrote: post #63
kevingadd wrote: post #57

Earlier quoted context omitted.

Fractional reserve is also regulated and deposits are insured up to a certain amount, so it's definitely not comparable to printing imaginary USDT - even if fractional reserve banking has many well-known issues.

That regulation didn't work so well 10 years ago. Regulation is for us, not the big dogs.

It worked fine. I don’t know what you’re talking about.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#65

Post by lagadu »

rb808 wrote: post #41

I was surprised to read that the US regulators feel they have jurisdiction to regulate bitcoin transactions. How can this be - is it just because there are BTC futures now?

Because fraud laws have no provision about them only being applicable to USD or any specific currency, plus there's the whole debacle of whether BTC is a security or a commodity, both of which fall under their own set of regulations.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#66

Post by ufo »

dTal wrote: post #58
ufo wrote: post #55

Earlier quoted context omitted.

Banks that use fractional reserve should still have balanced assets and liabilities. It is just that some of their money is tied up in loans to be paid back instead of liquid cash. If everyone the bank loaned money to paid back there would be enough cash to allow all the customers to fully withdraw their accounts. Bitfinex, on the other hand, is just outright insolvent.

Ah, so there is a difference. Thank you for clarifying. I wish I had phrased my post as a question - as a statement it seems rather unpopular...

You would be surprised how often other people use that exact argument but as a statement they say full of conviction instead of a question :) That might be the source of the confusion here.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#67

Post by TangoTrotFox »

Retric wrote: post #62
TangoTrotFox wrote: post #53

Earlier quoted context omitted.

51% attacks are mostly overblown. If a group decides to engage in a 51% attack, all they are doing is effectively revoking their own license to print money - which is what having a > 51% mining capacity in a major crypto translates to. Bitcoin is a public ledger and double spend transactions would be completely visible to all. All this means is that the coin would end up getting forked, similar to what happened when…

This assumes the entity wants Bitcoin to survive. The Chinease government has zero intrest in keeping Bitcoin alive and would happily kill it off. Forks don't help with 51% attacks as the attacker can continue to use their hardware on the fork. Further, you can use a proxy to hid the origin of a block, so Bitcoin would need to move to a new hash which would take a long time and prevent any obvious successor.

I was making the assumption that the entity wants to kill the coin. Doing a 51% attack out of greed makes no sense as it'd be immediately self defeating, at least on a mainstay coin.

There are numerous different hashes with varying levels of ASIC 'resistance' - yeah it's a cat and mouse game, but hardly a major issue. The 'obvious' successor would be a matter of the unpredictable public as I'm certain numerous entities would vie to become e.g. Bitcoin 2.0. In the end the market would decide which was the winner. The great thing about it all being that the users could actually come out net winners in the end as the successors would likely not only be technical superior, but it would also be able to use the exact same ledger (as with Bitcoin cash for instance) so that you start with the same relative share in it as you did with the original.

In a way it would even be a good thing as Bitcoin itself is increasingly dated technologically, but is dominant because of its market positioning - which makes it difficult to change. If its market positioning was damaged, we could see the rise of an improved successor.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#68

Post by dkersten »

adrianN wrote: post #40
Cthulhu_ wrote: post #32

Earlier quoted context omitted.

Traceable yes, but also anonymous since a BTC address is just a number without any personally identifiable information attached to it. It's at the edges - e.g. exchanges - where it becomes traceable.

Good luck using bitcoin in a way where you can't connect the BTC address to a real person after a small number of transactions. Anonymizing data is very hard, pseudonyms are almost never anonymous.

I know people who have exchanged bitcoins and cash anonymously on the street. Sounds pretty risky to me and I certainly don’t think it’s feasible for large volumes of either currency, but it’s possible and has happened, at least.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#69

Post by bfuller »

celticninja wrote: post #43
Cthulhu_ wrote: post #35

Earlier quoted context omitted.

They would've been right if it was the Zimbabwaean dollar if you bought it in the 80's, or one of Bernie Madoff's financial products. They could still be right, given time. They've been right for Bitcoin Gold, for example. They were right when MtGox crashed.

My point was more that as a regulated individual a financial advisor should never have advised an investment in bitcoin. Even if the market proved them wrong (as it has up to now) it doesn't make them wrong for not advising you to invest in it.

Not necessarily "should never have advised an investment in bitcoin", that would depend on the investors risk profile.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#70

Post by Retric »

TangoTrotFox wrote: post #67
Retric wrote: post #62

Earlier quoted context omitted.

This assumes the entity wants Bitcoin to survive. The Chinease government has zero intrest in keeping Bitcoin alive and would happily kill it off. Forks don't help with 51% attacks as the attacker can continue to use their hardware on the fork. Further, you can use a proxy to hid the origin of a block, so Bitcoin would need to move to a new hash which would take a long time and prevent any obvious successor.

I was making the assumption that the entity wants to kill the coin. Doing a 51% attack out of greed makes no sense as it'd be immediately self defeating, at least on a mainstay coin. There are numerous different hashes with varying levels of ASIC 'resistance' - yeah it's a cat and mouse game, but hardly a major issue. The 'obvious' successor would be a matter of the unpredictable public as I'm certain numerous entiti…

A few weeks/months/years of not being able to trade Bitcoins at old value is a real downside.
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