Bitcoin Tumbles After Major Crypto Exchanges Subpoenaed For Manipulation, Coinrail Hacked

Bitcoin and other cryptocurrencies flash-crashed Saturday night, one day after the US Commodity Future Trading Commission (CFTC) sent subpoenas four cryptocurrency exchanges in an ongoing probe into bitcoin manipulation that began in late July - following the launch of bitcoin futures on the CME, according to the Wall Street Journal

CME’s bitcoin futures derive their final value from prices at four bitcoin exchanges: Bitstamp, Coinbase, itBit and Kraken. Manipulative trading in those markets could skew the price of bitcoin futures that the government directly regulates.

In delay reaction, Bitcoin fell as much as $433 or 5.6% in Saturday night trading, with some noting that the flash crash happened shortly after a 90th ranked crypto exchange, Coinrail, had suffered a "cyber intrusion", and was likely the more relevant catalyst for the crypto price drop.

While major Cryptocurrencies were down from 4.5 - 5.5%, Bitcoin Cash dropped over 8.4%. 

The CTFC subpoenas were issued after several of the exchanges refused to voluntarily share trading data with the CME after being asked last December. Of note, the CFTC regulates the CTC. 

According to the WSJ, the CME, which launched bitcoin futures in December, asked the four exchanges to share reams of trading data after its first contract settled in January, people familiar with the matter said. But several of the exchanges declined to comply, arguing the request was intrusive. The exchanges ultimately provided some data, but only after CME limited its request to a few hours of activity, instead of a full day, and restricted to a few market participants, the people added.

What is curious, is that if there was indeed manipulation since the launch of bitcoin futures, it was to the downside, as the price of cryptos peaked around the time the crypto futures were launched, and are down well over 50% in the 6 months since.

Coinbase in particular has been under the watch government regulators. On February 23, Coinbase sent an official notice to around 13,000 customers to notify them they were legally required to turn over their information to the IRS

image courtesy of CoinTelegraph

The IRS had initially asked Coinbase in July 2017 to hand over even more detailed information on every one of its then over 500,000 users in an attempt catch those cheating on their taxes. However, another court order in Nov. 2017 reduced this number to around 14,000 “high-transacting” users, which the platform now reports as 13,000, in what Coinbase calls a “partial, but still significant, victory for Coinbase and its customers.”

Coinbase told the around 13,000 affected customers that the company would be providing their taxpayer ID, name, birth date, address, and historical transaction records from 2013-2015 to the IRS within 21 days. Coinbase’s letter to these customers encourages them “to seek legal advice from an attorney promptly” if they have any questions. Their website also states that concerns may also be addressed on Coinbase’s Taxes FAQ. The ongoing legal battle between Coinbase and the US government dates back to November, 2016, when the IRS filed a “John Doe summons” in the United States District Court for the Northern District of California.

On Feb. 13, personal finance service Credit Karma released data showing that only 0.04 percent of their customers had reported cryptocurrencies on their federal tax returns. 

And in April, former New York Attorney General, Eric "we could rarely have sex without him beating me" Schneiderman, launched a probe of 13 major cryptocurrency exchanges according to the Wall Street Journal - claiming that investors dealing in the fast-growing markets often don’t have the basic facts needed to protect themselves.

Former AG Schneiderman’s office said the program, called Virtual Markets Integrity Initiative,  is part of its responsibility to protect consumers and ensure the integrity of financial markets, and its goal is to ensure that investors can have a better understanding of the risks and protections afforded them on these sites.

CFTC Commissioner: Crypto is a "modern miracle"

While the CFTC, IRS and New York Attorney General's office are all cracking down on cryptocurrency exchanges, it seems to all be part of the government's embrace of virtual currencies.  Last week CFTC Commissioner Rostin Benham called cryptocurrencies a "modern miracleat the Blockchain For Impact Summit held at the UN in New York last week. 

But virtual currencies may – will – become part of the economic practices of any country, anywhere.  Let me repeat that:  these currencies are not going away and they will proliferate to every economy and every part of the planet.  Some places, small economies, may become dependent on virtual assets for survival.  And, these currencies will be outside traditional monetary intermediaries, like government, banks, investors, ministries, or international organizations.

We are witnessing a technological revolution.  Perhaps we are witnessing a modern miracle. -Rostin Benham

Rostin hinted at the upcoming legal action against the exchanges during his speech:

Under the CEA and Commission regulations and related guidance, exchanges have the responsibility to ensure that their Bitcoin futures products and their cash-settlement process are not readily susceptible to manipulation and the entity has sufficient capital to protect itself.  The CFTC has the authority to ensure compliance. In addition, the CFTC has legal authority over virtual currency derivatives in support of anti-fraud and manipulation including enforcement authority in the underlying markets.

Meanwhile, the official Bitcoin website removed references to Coinbase, Blockchain.com and Bitpay, according to Crypto News - only one of which, Coinbase, was subpoenaed. 

The CFTC officially recognized bitcoin as a commodity in September of 2015 when it went after Coinflip for operating a platform for trading bitcoin options without the proper authorization. Since the agency effectively asserted its dominance over the bitcoin market with that decision, this is the first time it has given its blessing to an bitcoin options trading platform. Expect a burst of institutional trading activity to follow - especially since they approved institutional options trading in July

Comments

ZIRPdiggler tmosley Sun, 06/10/2018 - 11:05 Permalink

I could agree if they actually went after "manipulators" but this is the same old story.  smoke and controversy to try and justify their existence (toothless regulatory bodies and useless blood sucking politicans like Marquis du Schneiderman).  The people who really get persecuted and punished here, are the little guys..  same old story.

In reply to by tmosley

Exponere Mendaces ZIRPdiggler Sun, 06/10/2018 - 13:35 Permalink

Again ZH with the back-fitting, just like CNBC. Seeing Bitcoin swing a few hundred points after a prolonged period of low volatility isn't surprising. But ZH needs those ad impressions, so why not write some inflammatory title for lulz.

The better story is how Lyin' Ver and the Cashies are trying hard to bury parts of this article:

https://blog.chainalysis.com/money-supply/

The tl;dr is here - https://twitter.com/BitMEXResearch/status/1004995365202886656

90% of BCash is purely speculative, versus Bitcoin that shares an even ratio between usage and trading. Just reinforces what a lot of us already knew -- that BCash is a pump-play that has little utility.

Of course Lyin' Ver is freaking out about this, and its pretty hilarious. I also see that BCash is down 12% sinking like a rock under 1k.

LOL

Tmosley really loves pickin' the shitcoins, doesn't he?

 

In reply to by ZIRPdiggler

gdpetti Yellow_Snow Sun, 06/10/2018 - 09:42 Permalink

Gold/silver represent the end of the OWO... and transition to the NWO, as the same puppet masters control most of the PMs in their central banks et al. They do this everytime.... same with all their other actions in history... same script as many like Spengler have pointed out.... as civilizations come and go... rise and fall... gold/silver/copper-bronze/iron ages.... we are at the very end of our 'iron' age....

One could see the kiss of death for BTC when Soros got involved... he's a psycho yes, but more importantly, he's OWO... which the puppet masters in the SG are taking down, exposing or outing.... with Trumpy doing his part, seemingly without awareness of what's going on, nor why.. he just doesn't realize the nature of the 'swamp' at all... how pervasive it really is.... 'purgatory', run by the 'dark side' or 'chosen people - of Satan'..... some of his Chabadi 'friends'.... partners, investors... giving the horned hand signs, one eyed salutes etc... it's everywhere as we approach the end... as they come out of the closet... just look at those psychos and pedophiles in the Church.... same in politics, MSM, education, entertainment... pervasive... 'birds of a feather flock together'...

Soros is just an easy example and he's falling into that crypto swamp... quicksand...

Many mean well, but it's all controlled by the same SG types pulling the strings.... which will continue until 'Purgatory' ends within a decade.... but the end of any 'iron age' isn't pretty.... all the EM affects as Mother Nature swings in to clean house usually point to major cataclysm at least to extinction level events most likely.... 'out with the old, in with the new'... the puppet masters don't see it coming ... don't want to see their losing control of the chaos they create... same in fiat, crypto etc... .which is where the PMs come back into play.... could be any commodity, salt was such in desert areas... tea etc... but the PMs have the commonality and history behind them as the tool of last resort... of transition.

In reply to by Yellow_Snow

Yellow_Snow gdpetti Sun, 06/10/2018 - 09:58 Permalink

Agree with a lot there... 

The big advantage of crypto's are they are bought and sold in so many ways, there are 100's of exchanges worldwide still operating independently of one another...  people don't care what the 'Bitcoin Future' price is...  As long as there is still some elements of decentralization... there is hope for Bitcoin and crypto.  Also, the use of digital currency as an efficient and viable payment system is a big plus... 

As far as Soros, I have always predicted that the elites will flock to Bitcoin as a source of asset protection...  It was inevitable that they would eventually get involved in the crypto-verse... unfortunately, they will also bring their shenanigans...

In reply to by gdpetti

ZIRPdiggler pelican Sun, 06/10/2018 - 11:02 Permalink

Doncha know its all our fault?  Then when we get the IRS notice from Coinbase because we made 10 trades last year, we get bankrupted trying to defend ourselves via f*cking lawyers.  Especially comical since, as you stated, they go after the very people they claim to be protecting.  tear it down and start over.  

In reply to by pelican

Yellow_Snow 1 Alabama Sun, 06/10/2018 - 10:12 Permalink

CFTC Commissioner: Cryptocurrency Will Proliferate to Every Economy in Every Country

https://www.newsbtc.com/2018/06/10/cftc-commissioner-cryptocurrencies-a…

We are witnessing a technological revolution.  Perhaps we are witnessing a modern miracle.

He also expects that cryptocurrencies will begin to take attention away from traditional economic systems, with Behnam adamantly declaring: 

Virtual currencies may – will – become part of the economic practices of any country, anywhere. Let me repeat that: these currencies are not going away and they will proliferate to every economy and every part of the planet.

Behnam said: 

Virtual currencies could transform the economic and social landscape. It could mean a massive, and equitable, shift of wealth. Technology could be transformational, without a military take-over, civil war, or political or religious creed.”

Also adding his positive outlook on the technology which underlies Bitcoin, the Blockchain, specifically stating:

Blockchain is more than technology:  it is an advance that reaches out into every aspect of life.  We could use Blockchain to address the most basic, the most primal problems on our planet:  corruption, income distribution, poverty, food, and health care. And, the fear billions of people experience everyday as they try to survive.

In reply to by 1 Alabama

Ajas anarchitect Sun, 06/10/2018 - 08:23 Permalink

Did anyone really think that much profit could be overtly taken and the IRS ignore it?

Same reason sports gambling is being legalized.  So many people were already doing it so the tax man come to collect.  Same reason weed is legalized (and taxed).  High taxes on gasoline, cigarettes, alcohol....

Gov eventually figures out it's a pain to make things illegal... it's more profitable to simply make them expensive.

In reply to by anarchitect

Decoherence anarchitect Sun, 06/10/2018 - 08:50 Permalink

Not to worry, the government is here to help once again.  Let’s face it, if crypto was the protection the true believers thought it was, it would be soaring right now.  If it’s getting slammed during currency crises around the globe, when will it perform?  The only questions that should be asked are, who’s getting screwed and who’s doing the screwing.  Anytime money is involved, those are basic questions.  Crypto is no different.  More intelligent sociopaths are putting the true believers / dumbasses over a barrel.  It’s all variations of the same thing.  Infinite growth on a finite planet is impossible.  All the idiots thinking this stuff was going to 50-100K never understood balance.  

In reply to by anarchitect

marysimmons Decoherence Sun, 06/10/2018 - 10:11 Permalink

Crypto is still in its infancy.  The technology is mind boggling and the infrastructure is being laid down.  Mass adoption is coming - just a matter of time. Here's just a few items to show what I mean (but I could list a LOT more):

Financial giant Fidelity wants in on the crypto markets:  https://www.newsbtc.com/2018/06/10/fidelity-searches-for-new-fund-manag…

Crypto exchange giant Huobi launching ETF - crypto ETF's will be ubiquitous in the next 12 months, IMO:   https://cointelegraph.com/news/united-states-v-crypto-etfs-a-lingering-…

Foreign governments will use cryptocurrencies to get around US sanctions:  https://www.coindesk.com/putin-russia-explore-blockchain-avoid-finance-…

In reply to by Decoherence

ItsAllBollocks Decoherence Sun, 06/10/2018 - 10:52 Permalink

Governments own nothing but debt and banksters control everything to do with money. They are all based in the City of London which also houses...

Bank of England
Lloyds of London
The London Stock Exchange
All British Banks
70 USA Banks
The Branch offices of 384 Foreign Banks
Fleet Streets Newspaper and Publishing Monopolies
Headquarters for Worldwide Freemasonry
Headquarters for the worldwide money cartel known as The Crown (no connection to the English monarchy)

The City of London is controlled by the Bank of England which is owned by the Rothschild family who also own your ass...

In reply to by Decoherence

Golden Phoenix lester1 Sun, 06/10/2018 - 17:55 Permalink

There are payment services such as Bitpay which allow businesses to accept crypto without exposure to fluctuation risk. There are also futures contracts which can be used to hedge fluctuation risk just as intelligent companies do with any other currency or commodity. 

Continually grabbing your own pussy is not an argument.

In reply to by lester1

Yellow_Snow anarchitect Sun, 06/10/2018 - 09:19 Permalink

It's a one way street...

Let me guess the outcome...

Those exchanges will settle with government for $1 billion each (standard extortion rate these days), whether they are guilty or not...  just to get the CFTC (the Wall St mob) off their back...

Do you think the mob will reimburse the investors that lost money ???  NO, they will keep those billions for themselves

If they were smart the exchanges would be heading to Malta like Binance did...

In reply to by anarchitect

Hammer of Light notfeelinthebern Sun, 06/10/2018 - 12:00 Permalink

CFTC Commissioner: Crypto is a "modern miracle"??????

Does anyone here not see how this can simply flip a persons life upside down, wringing it like choking, twisting, turning gripping with all might choking out the wet sock for every last drop it has?

Crypto' are a modern day miracle alright... yes... once fully in place, YOU WILL NEVER BREAK FREE OF THEM STEALING FROM YOU. And the theft will only become more and MOOOOOAR onerous as the years go by. It will make it soooo easy for the IRS or ANY fleecing government to keep you in total control, total silence and totally fucking broke. This is the easiest way I could ever dream of stealing from people, especially if I am a diseased IRS goon.

I give you the CFTC Commissioner: Crypto is a "modern miracle"

In reply to by notfeelinthebern

HRClinton notfeelinthebern Sun, 06/10/2018 - 15:36 Permalink

Evidently, the (((Plantation Owners))) will no longer stand for libertarian or free-market price discovery of the CCs, that are trying to live off their (((System))).

They will happily allow for systemic manipulation within their system, but not outside of it.

The underlying narrative and message they are conveying -- and 90% of ZHers are missing (cause 90% of them aren't so fvcking smart) -- is that "WE ARE IN CHARGE".

You can do your bit to change that, by slowly and systematically Going Galt, by joining the Parallel Economy (PE).

PE = Avoidance (and disintermediation) of Fiat Economy

     = DIY + Barter + PM + Crypto + Appreciating Collectibles

You know this to be true, even if you won't admit it.  But know this: Truth has its own inherent merit, regardless of the likeability or popularity of its author.

In reply to by notfeelinthebern