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China Bitcoin

Chinese Bitcoin Exchange Accused of Faking Trade Data 75

Posted by samzenpus from the fudging-the-numbers dept.
An anonymous reader writes in with this story about some questionable numbers reported from bitcoin exchange OKCoin. "Top Chinese bitcoin exchange OKCoin has been accused of publishing fake trading data, artificially inflating the number of currency transactions it is handling. Once China's second-largest bitcoin exchange, OKCoin is claimed to have published unrealistically high trading volumes in the wake of the Chinese central bank imposing a ban on financial institutions handling the crypto-currency. The ban saw several exchanges halt all incoming deposits, but OKCoin's trading data failed to show the dip experienced by fellow exchanges."
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Chinese Bitcoin Exchange Accused of Faking Trade Data More

Chinese Bitcoin Exchange Accused of Faking Trade Data

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  • No Such Thing (Score:5, Insightful)

    by mythosaz ( 572040 ) on Monday December 23, 2013 @12:21PM (#45767733)

    No such thing as bad press if you're Bitcoin. Just keep it in the news, and it'll stay worth something.

    $658 as I type this.

    • No such thing as bad press if you're Bitcoin. Just keep it in the news, and it'll stay worth something.

      There's a lot of negative things I could say about bitcoin, but this situation is the one case where I might have something good to say. Every bitcoin has a transaction log associated with it. If they're alleging higher volumes than other believe... Why not simply "query the database" as it were and analyze the data. This would be a fairly straightforward procedure for a forensic accountant.

      There is no need for speculation in this case; It's one of the few things about bitcoin that we can make objective sta

      • Re:No Such Thing (Score:4, Insightful)

        by TheCarp ( 96830 ) <sjc@carpa[ ].net ['net' in gap]> on Monday December 23, 2013 @01:32PM (#45768331) Homepage

        > Every bitcoin has a transaction log associated with it.

        Except exchanges don't necessarily need to use bitcoin to trade bitcoin. If you deposit money in a bank, and then wire the funds to another account, and then withdraw them, would you expect to get the same bills back? Of course not! The bank tosses your bills in with the rest and then hands back different ones from the pool.

        So if I send bitcoins to an exchange and sell them, then the buyer sells them later, that is 3 transactions (me sending them btc, me selling them, someone else selling them) only one of which must be in the block chain and that one isn't even counted as part of the volume!

        So yes, you are right:

        > Why not simply "query the database" as it were and analyze the data. This would be a fairly
        > straightforward procedure for a forensic accountant.

        Correct but the database is the private database of the exchange, which then should be correlated with the public block chain, but likely has a lot of information not otherwise in the block chain.

        -Steve

        • Except exchanges don't necessarily need to use bitcoin to trade bitcoin.

          And this, right here, is why you fail. Trade, defined: An exchange. To a computer, this is a very simple procedure; 1 or 0. Either it happened, or it didn't. If you want to play the exchange's game of "we're double secret trading stuff by moving database records around", well okay. Got some premier ocean front property to sell you in Florida then too.

          • Re: (Score:1)

            by Mdk754 ( 3014249 )
            You do understand that for the exchanges to work across their various different currencies they can't possibly use the bitcoin blockchain, right? Not to mention the speed at which the trades happen. If you're implying he fails because bitcoin blockchain must be used to trade bitcoin, you have a grave misunderstanding of what actually happens at an exchange.

          • This time, you fail...

            A trade on an exchange is NOT a trade on the bitcoin blockchain.

            An exchange holds your bitcoins for you... The only transactions that occur on the blockchain are when you fund your account with bitcoin, and when you withdraw bitcoin from your account.

            All trades on an exchange occur on that exchange only... There is plenty of room for faking trades at this point.

  • Bank acts up in lieu of regulation, customers "smartly" move their money out and bank dries up, right?

    • Re: (Score:3, Interesting)

      by mythosaz ( 572040 )

      I can't figure out why any bitcoin anywhere is in a "bank" that isn't your wallet, or the backup of your wallet.

      As if the Magic the Gathering Online Exchange is where I want to keep my money...
      http://en.wikipedia.org/wiki/Mt.Gox [wikipedia.org]

      • Re:So this should kill itself, right free market? (Score:5, Informative)

        by killkillkill ( 884238 ) on Monday December 23, 2013 @12:36PM (#45767883)
        Not that I endorse Mt. Gox (quite the opposite, really), but can we stop trowing "Magic the Gathering Online Exchange" into the conversation. The code for the trading platform designed for cards and the original owner/developer are long gone. The name is the only thing left. There are plenty of things to criticize the exchange over without this ad hominem.

        • Not so long as Cosby coins are still funny.

        • This particular ad honinem attack isn't.

          These exchanges are fly-by-night, and the fact that they got into Bitcoins after Magic and Poker are a good example of that. Why we trust them with millions and millions of dollars is nuts.

          They might have the budget for good security and operations staff now, but I suspect it's going in somebody's new house instead.

        • Not that I endorse Mt. Gox (quite the opposite, really), but can we stop trowing "Magic the Gathering Online Exchange" into the conversation. The code for the trading platform designed for cards and the original owner/developer are long gone. The name is the only thing left. There are plenty of things to criticize the exchange over without this ad hominem.

          MT Gox exemplifies what is wrong with the bitcoin scheme as a whole. It is not ad hominem, it's a perfect real world and recent example of the problem being discussed in this thread.

          You can be sure that until proper tracking, oversight, and regulation are in place, bitcoin will continue to be plagued by fiasco's such as those perpetrated by Mt. Gox.

      • Would you carry all your savings in the wallet in your back pocket? The digital equivalent of stuffing all your savings into a pillowcase or burying them in the backyard is extremely risky. Banks exist for very good reasons. Nothing about home computing was ever designed with the expectation of storing highly valuable information on it.

        • Re: (Score:2)

          by jovius ( 974690 )

          Isn't the main reason to not store money at home the protection against inflation? The value of cash will erode over time. Banks mainly provide facilities for handling the money, and some plans reward the customer with an interest rate that beats the inflation. Besides at the moment having Bitcoin savings at home seems the least riskiest option...

          • Convenience is also a reason to keep money at a bank. You can use a bankcard to make payments; if the bankcard is stolen, the bank will cancel it and reimburse you for unauthorized charges. So credit is an important aspect of a currency, one that bitcoin seems to want to ignore. I think it emphasizes hoarding and deflation, but sharing and inflation has accompanied the great advances in technology in the last century.

        • If I have a 50k deposit in a bank account, and said account disappears, our good friends in the FDIC will make sure I still get my money. It also becomes pretty difficult to close your bank, keeping all the money, without getting hunted down. If someone robs my bank, I lose zero dollars.

          Good luck getting anything that resembles those protections in a crypto currency. You'd actually be safer having multiple offline copies in different locations.

          • This is true, but if you read some things that have recently been published it isn't so clear that you will be able to withdraw that $50k. In an "emergency" they can limit or prevent you from taking your money out in cash. Just look at what happened in Cypress.

        • In a world where you can't make a backup of your pillowcase, your analogy would make sense.

      • Berkshire Hathaway was once a textile manufacturer. That has nothing to do with their present business.

  • Fraud in an unregulated currency? (Score:1)

    by Anonymous Coward

    Who could have guessed?

    • Re: (Score:2)

      by mi ( 197448 )
      I'd say, the record of the regulated currencies is much murkier... From various regimes debasing their "official" currencies since the ancient times [wikipedia.org], through middle ages [financial-...niques.com], and to these days of "Quantitative Easing".

      On balance, BitCoin has a lot to say in its defense — it certainly is not any worse, than the "regulated" currencies.

      • The lesson Quantitive Easing is that stimulus works. We should have more fiscal stimulus in the form of direct payments to individuals.

        • Re: (Score:2)

          by mi ( 197448 )

          The lesson Quantitive Easing is that stimulus works

          Does it? How do you figure?

          We should have more fiscal stimulus in the form of direct payments to individuals.

          I don't think, the Treasury has the money for such payments, do you? Or do you propose to print more? You do realize, this will lead to inflation — which is the tax on savings?

  • Bitcoin is certainly in a bubble. My ex called a few days back and asked "what do you think of investing in Bitcoin?"
    I replied..."The reason you heard about Bitcoin is because its in a bubble. So do not invest. If you were asking me this question early in 2012 I would have said yes. Wait till it goes below $100."
    It seems one of her acquaintances, the scion of a wealthy business family is getting into the game with a Singapore based exchange. That guy can lose a lot and it won't matter, for regular folks

  • Other exchanges may fake data, too. (Score:3)

    by Animats ( 122034 ) on Monday December 23, 2013 @01:23PM (#45768269) Homepage

    During periods of heavy trading, Mt. Gox trade data has repeatedly been observed to be unrealistic. Sometimes it gets very strange. [reddit.com] During heavy trading periods, trades are often done out of order. Delays up to 46 minutes have been reported. Whether this is incompetence or market manipulation has never been entirely clear.

    (Despite all the hype, Bitcoin transaction volume is not large. Most exchanges do a few transactions per minute.)

  • Are going to see the return of unregulated speculation like we did before the SEC was established?

    • Are going to see the return of unregulated speculation like we did before the SEC was established?

      Apropos of nothing, has unregulated speculation decreased since the SEC was established?

      I seem to recall something about Glass-Steagall and credit default swaps from a few years back. I can't a link right now, maybe the incident was of no consequence.

      • Re:Unregulated... what? (Score:5, Insightful)

        by Lloyd_Bryant ( 73136 ) on Monday December 23, 2013 @01:48PM (#45768471)

        Apropos of nothing, has unregulated speculation decreased since the SEC was established?

        Wish I had mod points. The reality is that the SEC is to unregulated speculation what the TSA is to terrorism - just a show to convince the people that the govermnet is actually doing something about the problem.

        Maye we should add the term "regulatory theatre" to the lexicon along side "security theatre"...

        • You should tell your ideas about the SEC being "regulatory theater" to Jeff Skilling, and Raj Rajaratnam, and Bernie Madoff. They will find them most entertaining.

          • Yes, the SEC did a great job of preventing those frauds from occurring, instead of swooping in after it all fell apart.

  • If this is true and the Bitcoin regulatory authority gets wind of it...

    oh wait

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