Topic: [Cryptostock] Bitcoin Algorithmic Trading Fund IPO (pre-IPO, interest gathering) (Read 3930 times)

https://www.cryptocoinsnews.com/sec-sends-inquiry-letters-hundreds-bitcoin-companies-unregistered-securities/

You noticed that too?  Props to you for taking the effort to outline some of it.

As a computer scientist, allow me to break this down a bit for users who might otherwise be impressed by words they don't quite understand.


"We will be attempting to front running trades on some shady-ass exchange who is willing to hand over details of their user's accounts."


"Naturally we can't tell you who because this is probably illegal as fuck in most jurisdictions."


"We want to be as close as possible to the exchanges so that we can fuck the other investors without inside information as hard as possible."


"We use frequency counting methods and simulated trades on historic data to guess what might happen next in the real market.  We do this using open source software that we are going to pretend is proprietary by using the phrase 'we have also obtained'."


"While we do properly modularize our code, we are doing parallel computing in the most difficult way possible.  Not only does this waste programmer resources, it dramatically increases the likelihood our code will contain hard to detect errors that may only show up in production no matter how much testing we do."


"Again, we have to be first in line to maximize the advantage our inside information gives us."


"Big data.  Yeah, I've heard that a lot.  Throw that in there".... Big data is marketing speak, not a standard that someone can be "compliant" with.

And now this is beginning to sound like a scam.

This thread has got to be a joke.

Let's take a look at your "business plan":


You cannot, in any feasible manner, by machine-learning trading-algorithm or otherwise, guarantee that this will happen. Further, regarding the data set which you trained this algorithm on, how did you determine the difference between natural price movements which simply followed another large trade rather than those that were caused by them? You cannot deduce this kind of causal relationship from market data alone.

Post hoc ergo propter hoc is a logical fallacy.

This is a joke, and even more of one if you sincerely believe that this is a sound or effective strategy.

Hello,

We do not except everyone to agree with our business model. After all, satoshi himself faced extensive skepticism after launching bitcoin in 2009. If you recall, everyone on the mailing list denounced him after his posted the initial bitcoin prototype.

Unfortunately, I come from a background of experience in the wider public markets and I can affirm that there are companies running this exact same business model in public markets, and making high profits. You may not like it as an individual trader, but our company seeks to exploit the bitcoin market for the benefit of our investors. We work and act for our investors alone.

Finally, our model is short term. It does not seek to change over the long run the value of bitcoin, and will be profitable in bear or bull markets. It incorporates elements that are common to publicly listed algorithmic trading funds. We do not have an opinion on the bitcoin price or the direction of bitcoin. The only prerequisite is sufficient liquidity to allow profit of our algorithm, and we have already determined that exists on 2 of the existing exchanges.

I'm out of time to fully respond to this reply right now, but I'll aim to post more information about the fund and algorithm. I understand some investors may be skeptical given past scams and frauds etc. That's not a problem, but we are fully legitimate as our follow up postings will show.

So let me get this straight.  You want people to invest in your "IPO" so you can use the coins to "manipulate"/short the market on margin via your "algorithm" effectively undermining the value of the other coins that I hold?

Brilliance! 


Otherwise, my bullshit detector is going off the charts, so thanks but no thanks.

Hi everyone

Just to remind you, IPO is in less than 3 months and I'm pleased to announce today that we've set a provisional date of Jan 20 2015.

I've got some exciting details of a pre-launch discount on shares. I'll post an update about that in the next few days.

If you have any questions, feel free to post here or even to PM me (all PMs are treated in strict confidence. I've already had some private discussions on PM with investors)

Thank you.

Hi everyone

I've had some PM's asking for clarification about the algorithm, so I can follow up with this (with partnership with the developer of the algorithm).

Please feel free to ask any follow-ups.

Thank you.

* Algorithm has been under development for the past 12-24 months. Initially, our job was just collecting data from the exchanges, although a partnership has been agreed - pending IPO - with one of the major exchanges - which currently accounts for 20-30% of global bitcoin trades, to purchase data on trades, including the account sizes of individual traders (that may be utilized for finer detail of the algorithm).

Due to NDA signed between ourselves and the exchange, I'm not able to disclose the exchange but this deal was agreed thanks to a personal relationship we have with one of their investors. This agreement is in writing pending IPO. This agreement was signed in July 2014. A 3rd party notary will provide notarization of this document for investors to examine prior to IPO.

Part of the IPO funds will be utilized to pay for and finally obtain this data.

* There is a plan in place to roll out the algorithm to a datacenter in Burlington, MA USA to gain the lowest latency to Bitstamp. Discussions are also being made with Huobi and BTC-e to place similar instances in their datacenters

* Pattern-matching features incorporate a partly-complex Bayes Classification P(A|B) = P(B|A)P(A) , that operates to 3 degrees of freedom. Developer has plans in the pipeline for further quant add-ins to the algorithm, including Monte Carlo calculations and Binary Tree methods. We also have obtained Java libraries including Bates Model, Quant Lib and Apache Cassandra

* "Object orientated" code utilizes semafores, encapsulation and multi-threading

* Multiple redundant servers are located in Virginia, USA and Singapore, allowing for reduced global latency

* The algorithm is fully compliant with big data

Hello and thank you for your comment.

I'd like to counteract your statement that this is a ponzi, since we have outlined in detail our methodology behind how we will generate alpha through use of our proprietary algorithms. I do not believe ponzi-schemes generate alpha.

Our USP that differentiates us is our trading methodology and alpha. As discussed, we have a genuine way to create profits in the bitcoin market. We believe it's a simple methodology and in particular our TA removes the primary risk carried by other similar schemes.

If you have any further clarification questions, I'd be happy to answer them.


Hello, thank you for your comment.

As discussed, I believe our scheme is non-reproducible with the key defining fact being our proprietary trading algorithm that gives us an advantage against other traders.

Market manipulations have been shown in the past to be highly profitable for certain investors. For example, many of the schemes executed by Fontas in the Litecoin market. Please see the following URL's for information about that.

https://bitcointalksearch.org/topic/ltc-pump-and-dump-245088

https://forum.litecoin.net/index.php/topic,4698.0.html

https://litecointalk.org/index.php?topic=4698.0

https://bitcointalksearch.org/topic/32-295529

https://bitcointalksearch.org/topic/fontas-pump-and-the-sudden-support-of-trc-on-btc-e-in-the-same-week-hmm-170180

Our fund aims to pool investor capital in order to replicate these schemes with bitcoin. Since we have already collated and processed the data on whether these schemes will work or not, we believe it's a very low-risk strategy to making money.

We have already completed the hardest part of the challenge, that is developing the algorithm and collecting the data. At this stage, we just require the capital in order to move the scheme to completion.

As you can imagine, this scheme cannot be executed by most individual investors because it requires a significant volume of trading capital in order to effect fluctuations in the bitcoin price. That represents another barrier to entry and will work in favor of our investors.

Please let me know of any additional questions or follow-ups, and I'll be happy to answer them.

Thanks for your comment.

Firstly, the above comments on the bitcoin price are personally directed and do not reflect the business of the fund. Hopefully investors can understand that there is a separation between business and personal activities, and that comments made by an employee may not reflect the opinion of the business.

Having said that, following this pre-announcement, I will not make any further public comments on the bitcoin price. I would like investors to judge the merit of this fund on the business sense, methodology and ultimately P/L rather than any non-relevant comments by the fund's employee or traders on the bitcoin price itself.

Secondly, I believe your comment "You don't really seem to have a strong grasp of the BTC market." is without evidence. If you'd like to follow that statement with evidence, I'd be happy to answer it.

Finally, this is a Pre-IPO announcement. Given that, all proposals mentioned herein are proposals. Given that enough interest can be determined, it is the intention of the fund to register as an investment company. I cannot say anything more than that at this moment.

Thanks for your comment, please let me know if you have any further questions or follow-up.

You're going to need a better plan than "sell Bitcoins, wait for price to drop, buy them back" to make this a semi-decent fund.

What annoys me most about "funds" is that it is a very lazy way of raising people's money. Most end up as Ponzis, becoming a Ponzi or just fail. Don't get me wrong I like the idea of these "fund" and I would invest in them from time to time but it is so annoying when there are apparently 5 new funds every week just because it's obviously a very lazy job for those who don't know what they're doing. Despite that, I am not saying that all bitcoin funds are scams but it appears that it's very difficult to find one good fund manager, the only people who want to create funds are usually new members or have some other flaws and are likely quite inexperienced.

"The Bitcoin Jupiter Fund (BJF) is a Registered investment company. Registered investment companies are registered under the 1940 Act and subject to significant disclosure and ongoing compliance obligations. As registered investment company securities are also registered under the 1933 Act, they may be offered to the public"

Bullshit


Your response to a thread about a dream of BTC going sub $100:


You don't really seem to have a strong grasp of the BTC market.

On another note, do you have any clue on how expensive it is to register as an investment company in the US? Il wager this never happens.

Bitcoin Jupiter Algorithmic Trading Fund Ltd. is a new bitcoin algorithmic trading fund and is right now announcing the pre-launch of our new bitcoin investment product.

PRE-IPO ANNOUNCEMENT

This post forms the initial announcement of our IPO and solicitation of investments. Please note this is a pre-IPO announcement and does not constitute an offer of investment. However, at this time investors are offered the opportunity to read more and formulate suitable questions for the fund managers. Our IPO will be forthcoming in the next 3 months as of today (12 October 2014), and we will make a new thread when our IPO launches.

BACKGROUND

The opportunity stems from an observation over the past 12-24 months that has remained stable throughout the 3 crashes witnessed in the bitcoin market on all 5 different exchanges. That is, the low level of market liquidity can often lead to outsized market movements.

The lead trader of the fund has been involved in bitcoin trading since 2011 and has conducted over $1m in bitcoin trades on MtGox, Bitstamp, Bitfinex, Huobi (CNY), Bitcoin Central and Local Bitcoins.

THE OPPORTUNITY

The investment opportunity is a fund of bitcoin funds that are grouped together in 1 single investment tranche. The purpose is to affect sizeable market manipulations and therefore affect better exchange rates for participants in the fund.

Due to the low liquidity of the bitcoin market, it is possible to significantly alter the bitcoin exchange rate through just a small number of trades. An example of this was experienced in just the last few days, please see this article:

http://www.coindesk.com/bitcoin-price-finds-hard-floor-following-26000-btc-sell-order/

We have developed, over the last 12 months, a proprietary Trading Algorithm (TA) that utilizes over 12 million trades of historical market data gathered from Bitstamp, MtGox and Huobi since 2011.

The Algorithm functions as follows. Given a particular level of market activity, the Algorithm will output the necessary trade volume to achieve a particular movement in the bitcoin price. This allows a trader to calculate exactly how much volume will move the bitcoin price, and therefore affect a market movement with the minimal risk of ineffective price fluctuations (IPF) - that is, a fluctuation which does not result in a price movement that can be exploited for profit.

Such IPFs are the biggest risk in any such scheme of market manipulation, since they may result in losses due to the spread (bid ask difference) and any broker commissions. Uniquely to this scheme, our Algorithm will output the movement of the market given a particular trade volume input, minimizing IPFs and any such trading costs.

The Algorithm is programmed to run on the Bitstamp exchange, and this is where all trading will take place.

A typical strategy of trade execution will be the following:

(1)  Place a Market Sell Order (MSO) over a pre-determined size limit, pre-determined using the Trading Algorithm (TA) proprietary to The Company

(2)  A pre-calculated drop in the bitcoin price is created

(3)  After a pre-determined time limit has expired (the time limit forms a secondary output from our Algorithm), place a Market Buy Order (MBO) at a size greater than the MSO

(4)  The MBO is executed and returns the price to its original position. Following execution of the MBO, the fund will observe a profit on its original holding thanks to the calculation of TA and the liquidity levels we have observed in the market since 2011.

The opportunity is to take advantage of our Trading Algorithm, combined with the low observed liquidity, for the benefit of our investors. Investors therefore will benefit from pooling their investment together such that the low liquidity, far from being a hindrance as it may be to the individual average-sized trader, becomes an advantage.

The above text, whilst short, concludes the mechanism of operation (MO) of the fund. Further information will be added to this announcement as comments accrue.

The following pre-text announces the legal structure, jurisdiction and tax arrangements of the fund and is subject to change between today (12 October 2014) and the launch date of the IPO.

LEGAL STRUCTURE

BJF is an interval fund. The fund will sell a fixed number of shares in the initial public offering (IPO). The shares will then trade in the secondary market (To Be Specified by us) at a price that may be greater or less than the fund’s net asset value. As closed-end fund shares are generally not redeemable, investors wishing to exit from their investment must generally rely on the secondary market to sell their shares.

As an interval fund, the Bitcoin Jupiter Fund is permitted to offer shares continuously at a price based on the fund’s net asset value and periodically offers to repurchase its shares from shareholders. Such repurchase offers will generally be made every three, six or twelve months. The purchase price is based on the fund’s net asset value per share as of the date specified in the repurchase offer (generally, no more than 14 days after the date on which shareholders must submit their acceptance of the repurchase offer).

LEGAL JURISDICTION

The Bitcoin Jupiter Fund (BJF) is a Registered investment company. Registered investment companies are registered under the 1940 Act and subject to significant disclosure and ongoing compliance obligations. As registered investment company securities are also registered under the 1933 Act, they may be offered to the public

TAX ARRANGEMENTS

The Bitcoin Jupiter Fund (BJF) is based in the Isle of Man, a recognised jurisdiction that sits independent of EU and UK tax laws. The Isle of Man has ‘full’ double tax treaties with the UK, Estonia, Bahrain and Malta, and a number of limited tax treaties with a number of other jurisdictions. The Bitcoin Jupiter Fund (BJF) is a Registered investment company and has a permanent establishment (PE) on the Isle of Man, and profits attributable to that PE are taxable on the Isle of Man.

This concludes the pre-announcement of our IPO. Please add your questions below which we will be pleased to answer.