Researchers believe that the price of Bitcoin from $ 150 to $ 1000 raised one bot

Economists Neil Gandal, Tyler Moore, Tali Oberman and others published a curious article “Price Manipulation in the Bitcoin Ecosystem” in the scientific Journal of Monetary Economics , which describes how the cost of cryptocurrency is controlled by several key players who remain behind the scenes. Researchers claim that one person (or, more likely, one organization) is responsible for the rise in the price of Bitcoin from $ 150 to more than $ 1000 for two months in 2013.

It was obvious to many that the bitcoin markets were at least manipulated by several large companies. But the publication analyzes the consequences of specific actions detected following the outflow of these transactions from the Mt. Gox (18 million transactions in CSV files with user IDs that bought or sold currency). Checking these data, the researchers found that as a result of suspicious trading activity, fraudsters fraudulently seized more than 600,000 bitcoins valued at $ 188 million, and independently raised the price of cryptocurrency several times.

In both periods, when suspicious transactions were carried out (characterized by many times increasing trading volume), the USD / BTC rate grew by an average of 4% per day. And in those days when they were not conducted, the rate of cryptocurrency was declining or almost did not show growth.

The researchers found that the market in which there are not so many transactions, it was extremely easy to manipulate. Despite the large capitalization, it was not regulated at all, and became an excellent platform for fraudsters.

For the manipulation in 2013, there were two bots - “Marcus” and “Willie”, who probably worked from the same source. You can read about the specific scheme in the study - with graphs, tables and everything else. But the point is that, for example, Markus did not pay for the bitcoins he received through the exchange. A cryptocurrency was fraudulently credited to his account, which was not supported by anything. And not a single real customer Mt. Gox did not receive Fiat, which Marcus allegedly “paid” for Bitcoins. The bot was active from February 14 to September 27, 2013. For 225 days, he collected 335 898 bitcoins at the price of about $ 76 million.

The second bot, Willy, worked with 49 different accounts. They quickly bought Bitcoin for exactly $ 2.5 million each, and never spent it. The first account became active on September 27, 2013, 7 hours and 25 minutes after Marcus’s deactivation. The researchers were able to track Willy's activity until November 30, when the last account was created, which spent $ 2.5 million.

The users who sold the Willco bitcoins were likely to be quite real, instead of duplicate entries, like those of Marcus, and they knew about the transaction. But still, economists are confident that Willie cheated. First, it is obvious that it was launched by the same people who worked with Marcus. Secondly, the ID of his accounts on the exchange were in the range of 658152-832432, while the ID of normal accounts did not exceed 650,000. Thirdly, there is some evidence that the trading API in Mt. Gox went offline for some periods of Willie's work. No transactions of other users during these periods were carried out - except for Willie’s purchases. Researchers include the case of January 7, 2014, when the API was offline for 90 minutes. At this time, one buyer remained working on the stock exchange “in a mysterious way”, following the same patterns as Willy’s accounts: 10-19 bitcoins were bought every 6-20 minutes, which made it possible to support cryptocurrency.

In total, Willie until December 2013 bought 268,132 bitcoins worth $ 112 million. Researchers believe that users who sold Willie’s coins did not receive real fiat money. They also note an interesting correlation with the fact that Mt.Gox, during its bankruptcy in March-April 2014, announced a loss of 650,000 bitcoins - which roughly corresponds to the number of cryptocurrencies purchased by fraudulent systems.

In their work, economists relied, among other things, on independent research by users of Reddit ( 1 , 2 ), and put forward suggestions that Mt.Gox and its founder Mark Karpeles might not have set themselves the task of stealing funds from the exchange's clients. If you believe that they really lost the specified amount of cryptocurrency, it is likely that the exchange launched the bot to try to hide this fact and soften the blow. Raising the price of Bitcoin attracted new customers and increased the number of transactions. The only condition for the effectiveness of the scheme with Willie was that users who sold bot accounts to a cryptocurrency on the exchange left their Fiat in Mt. Gox, and did not withdraw it to real accounts. The researchers suggest that Willy and Marcus did not try to “get hold of” cryptocurrency (as evidenced by the fact that they did not sell it to anyone), but helped to avoid the collapse of the stock exchange.

The researchers do not claim that the bots were 100% owned by Mt. Gox, their article has a slightly different conclusion. Their goal was to demonstrate how simply it was more than 6 times to raise the price of Bitcoin, without making, in fact, no real transactions, and to draw parallels with what is happening in the markets today.