The article is clearly looking to exaggerate what's going on for sensation purposes, but it's definitely true that bots are dominating the crypto market, and that more than ever before.
What interests me the most is whether or not the operators of these bots are granted crucial insider data from the exchange, allowing them to front run people's orders and perhaps even know about large deposits and withdrawals. In an industry this unregulated and gray it would really surprise me if this isn't happening.
And then we have another tier of insider manipulation, which comes from exchanges operating bots themselves. BitMex has an internal market making desk running that trades to profit, and why wouldn't other exchanges abuse their position to do the same?
Topic: [2018-10-03] Bitcoin Price Manipulated by Cryptocurrency Trading Bots: WSJ - page 2. (Read 318 times)
October 03, 2018, 10:00:19 AM
October 03, 2018, 09:39:49 AM
Everyone knows about manipulations taking place in the market and it's a part of the game to not be fooled by them. From my point of view, forbidding such practices by law is not effective, apart from being in discord with the idea of free market. I like the words by Kjetil Eilersten, developer of Quatloo Trader. If everyone manipulates, no one manipulates, he said. That's how you deal with problems in the free market, you engage in combat instead of asking the government to outlaw your opponents.
October 03, 2018, 07:42:48 AM
Bots that manipulate bitcoin price are not new, and they aren’t going away, according to The Wall Street Journal. The problem continues to draw regulatory scrutiny, as it was cited by the Securities and Exchange Commission (SEC) when it rejected several bitcoin ETF applications in August.
Andy Bromberg, president and co-founder of CoinList, which issues tokens, told the WSJ that the bots are rampant marketwide, at least at the present time.
Stefan Qin, the managing partner at cryptocurrency hedge fund Virgil Capital, uses its own bots to battle “enemy” bots on dozens of cryptocurrency exchanges worldwide. His company has built error handing functions to identify activities that are potentially illegal, referencing the crypto sector as the “Wild West of Crypto.”
How One Bot Manipulates The Market
Virgil, which specializes in arbitrage, suffered a “harassing bot” earlier this year that targeted certain ether trades, Qin told the publication, causing losses.
Virgil was checking prices every minute looking for arbitrage opportunities with cryptocurrency prices. The hostile bot would post and order to sell ether at a price lower than what other sellers were offering, prompting Virgil to try to make a buy. Right before Virgil completed the purchase, the bot would cancel its sell order. As a result, Virgil posted buy orders that never got executed, which increased the price on other exchanges, according to Qin.
This practice of faking orders and then canceling them is known as “spoofing,” the purpose of which is to create the impression that supply or demand for an asset is higher than it actually is. U.S. futures and stock markets outlawed the practice in 2010, but there have long been allegations that it is taking place in the cryptocurrency markets....
Source - https://www.ccn.com/bitcoin-price-manipulated-by-cryptocurrency-trading-bots-wsj/
Andy Bromberg, president and co-founder of CoinList, which issues tokens, told the WSJ that the bots are rampant marketwide, at least at the present time.
Stefan Qin, the managing partner at cryptocurrency hedge fund Virgil Capital, uses its own bots to battle “enemy” bots on dozens of cryptocurrency exchanges worldwide. His company has built error handing functions to identify activities that are potentially illegal, referencing the crypto sector as the “Wild West of Crypto.”
How One Bot Manipulates The Market
Virgil, which specializes in arbitrage, suffered a “harassing bot” earlier this year that targeted certain ether trades, Qin told the publication, causing losses.
Virgil was checking prices every minute looking for arbitrage opportunities with cryptocurrency prices. The hostile bot would post and order to sell ether at a price lower than what other sellers were offering, prompting Virgil to try to make a buy. Right before Virgil completed the purchase, the bot would cancel its sell order. As a result, Virgil posted buy orders that never got executed, which increased the price on other exchanges, according to Qin.
This practice of faking orders and then canceling them is known as “spoofing,” the purpose of which is to create the impression that supply or demand for an asset is higher than it actually is. U.S. futures and stock markets outlawed the practice in 2010, but there have long been allegations that it is taking place in the cryptocurrency markets....
Source - https://www.ccn.com/bitcoin-price-manipulated-by-cryptocurrency-trading-bots-wsj/
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