Saturday, March 23, 2019

Study Finds That Overwhelming Majority Of Bitcoin Trading Volume Is Faked

The great bitcoin bull market of 2017 wasn't the first bubble in the pioneering digital currency's brief lifespan, and it might not be the last, but to this day, these losses still hurt, and what's worse, for many of those who had chosen to hold on, coins have been stolen or lost thanks to hackers and con artists, who for years operated with near-impunity (though this is finally beginning to change).
For these (and myriad other) reasons, attempts to legitimize bitcoin have largely floundered. Trading in bitcoin futures has fallen off a cliff, while the SEC has continued to resist the creation of a bitcoin-focused ETF. Perhaps the biggest disappointment of all was the Grayscale Bitcoin Trust, which allowed anyone with a brokerage account or IRA to gain exposure to bitcoin (but for a massive premium). During the crash, it delivered huge losses.
Yet, since the beginning of the year, desperate bulls have found some justification to keep hanging on. Over the past few months, the digital currency has slowly crept higher. A drumbeat of negative headlines, including one warning that the majority of bitcoin exchanges had likely turned a blind eye to suspicious activity, have had little impact.
Still, suspicions endure. Whether it's Bitfinex using tether to prop up bitcoin prices, or a handful of 'whales' colluding to push prices in their favor, theories about widespread manipulation in the bitcoin market have festered for years.
And in the latest blow to crypto's credibility, the Wall Street Journal reported on Friday - citing data from a research firm that has been closely monitoring trading activity across dozens of exchanges - that the vast majority of bitcoin trading volume is an illusion - likely faked by the exchanges themselves using cunning trading algorithms to give customers the false impression of a deep, liquid market.
Oddly enough, Bitwise Asset Management, the firm that carried out the analysis, sent its findings to the SEC with the hope of convincing the regulator to finally drop its opposition to a bitcoin ETF (the firm is hoping to launch one that would limit trading to exchanges that don't manipulate trading volume).
Jazz


Over the course of four days in March, Bitwise analyzed the trading activity at 81 exchanges, and discovered suspicious patterns that analysts said suggested that much of the activity was being generated by programmatic trades intended solely to the inflate the exchange's perceived volume. This, in turn, helped the exchanges game the rankings on websites like CoinMarketCap (which, in theory, should lead to more business), the analysts concluded.
The San Francisco-based company submitted its research to the U.S. Securities and Exchange Commission with an application to launch a bitcoin-based exchange-traded fund. The study, made public Thursday, is an attempt to alleviate the agency’s longstanding concerns that a bitcoin ETF would leave investors exposed to fraud and market manipulation.
Bitwise’s fund, if approved, would be based upon the 5% of trading it considers legitimate, said Matthew Hougan, Bitwise’s head of global research. That volume comes from 10 regulated exchanges that can verify that their trading data and customers are real. This slice of the market, he said, is well regulated, transparent and efficient.
"I hope everyone sees there is a real market for bitcoin," he said.
When Bitwise ran its analysis, it found that 71 of the 81 exchanges it examined harbored activity that appeared fraudulent. Of the $6 billion that changed hands during the study, Bitwise calculated that only $273 million in volume appeared legitimate. The overwhelming majority of the fraudulent activity appeared to take place on newer, unregulated exchanges like Coinbene and BiBox, two of the examples listed by WSJ.
Some of the suspicious patterns Bitwise identified included a surprising number of trades being executed within the bid-ask spread, buy and sell orders cancelling each other out, and volumes that were steady throughout the day (rather than registering peaks and valleys during normal trading hours).
Bitwise created a program to collect and analyze trading data across 81 exchanges, looking for patterns that exemplified both real and artificial trading. It concluded that 71 of the 81—or 95% of reported volume—are questionable, with patterns that indicated the trading on them appears manufactured.
Of the roughly $6 billion in reported daily volume during four days in March, the firm calculated that about $273 million was legitimate.
On regulated exchanges such as Coinbase, Gemini, BitFlyer and Poloniex, trading followed certain patterns, according to the Bitwise report. Trading volume, for example, rose and fell at predictable times coinciding with working and sleeping hours. Smaller trades were more frequent than larger ones, and many were in round numbers. All those patterns reflect how human traders think and act.
By contrast, the dozens of unregulated exchanges that have cropped up over the past year show different trading patterns. Buy and sell orders appear in pairs, with one neutralizing the other. Trades are almost always executed within bid and ask prices, indicating a lack of the more haphazard decision-making one would expect from human traders. There are very few small or round-number trades. Volume is consistent across the trading day.
The unregulated exchanges also show massive volume. Coinbase, the largest of the regulated exchanges, had average daily volume of around $27 million in the first week of March, when Bitwise collected its data. By comparison, CoinBene, a newer exchange that first appeared in October 2017, reported $480 million in daily volume over the same period. Yet CoinBene’s website attracts far less traffic than Coinbase, which is in 55,097th place by Amazon’s Alexa ranking service, compared with 1,500th for Coinbase.
Of course, if such a large percentage of trading in bitcoin, the oldest cryptocurrency, and the one with the broadest appeal, is fraudulent, just imagine what that means for the alt-coin market.

Monday, March 18, 2019

Internet Censorship and False Flag Fake wars coming to a city near you

Global Intel Hub 3/17/2019 (Zero Hedge Exclusive) -- This recent shooting in NZ was not just a 'shooting' it was a crossing of the Rubicon into a new sea of Orwellian fear and loathing.  As we explain in our book, NOTHING is as it seems.  Everything is about OPTICS and what really goes on is largely disregarded.  New Zealand is a testing ground:
For years New Zealand has been utilised by app developers, social media companies and software developers to test new technologies, but the risks and benefits for Kiwi consumers and businesses remain unclear. Ged Cann reports.  If you want to test it, come to New Zealand.  That's the mantra overseas, where New Zealand's advantages as a testing ground have been common knowledge in the international tech industry for decades, according to one world-wide developer.
Alright but so what?  The fact remains that 90% of tech innovations come from the Military.  Also there is a growing problem for the Military as the enemy du jour, Terrorists, are becoming far less common, for a number of reasons including but not limited to the success of firms like Palantir.
Fake News is just the left angry that they couldn't lie their way into the White House - what we really need to be concerned about is Fake Wars.  Internet Censorship in New Zealand existed far before the shooting.  The draconian call to delete the horrid video from your personal computer can only be for one reason - they don't want people looking at this again and again and realizing there are facts that don't match up with reality.
911 was a complete control job.  Social Media practically didn't exist and internet penetration was nothing like it is today.  In 2001 people didn't have HD camera in their pocket that could live stream events as they happen.  Tactically speaking 911 was even sloppy, as some footage showed things that probably shouldn't have been there - but it was a HUGE JOB, equivalent of David Copperfield making the Statue of Liberty disappear.
There are a number of analogous facts shared by the attack on the North Korean embassy in Spain and the terror event in Christchurch which suggest that the same team was involved in both incidents. In both cases the perpetrators showed that they were well versed in "breach and clear" tactics against buildings filled with people. In both cases the buildings were cleared efficiently and quickly even though the goal of the North Korean incident was focused on intelligence gathering as opposed to mass murder. Aerial analysis of the North Korean embassy in Spain, the Al Noor Mosque and the Linwood Islamic Centre show that all buildings are of similar size and each would have required the same know-how and training to breach.
Remember though that because the internet is completely censored in New Zealand on an ISP level, it means that at some level, they 'allowed' this video to be broadcast.  That type of Censorship wasn't possible in the Las Vegas mass murder concert shooting.
Is this a 'test run' for the new War 3.0 of the future?  Fake Wars: Race wars, proxy wars, information wars, and 'fake threats' ?
One thing does reek of false flag is the NZ Government's immediate reaction to clamp down on internet freedom and gun laws, although it's still unclear where the Shooter obtained these weapons from as he would have probably failed a background check with his recent travels to Pakistan (a huge red flag).
One thing about NZ is that it's easily controlled for 2 reasons - it's far removed from the rest of the world and if they control the internet they basically have a lock down on what's going on inside NZland.
Fake Wars means wars engineered by high tech Military outfits like Cubic Simulation Systems.  
Guys this is important this is the new battlefield.
There is never going to be a 'traditional' war like we had World War 2.  There is no threat from China or Russia.  The Nuclear arsenals of the Nuclear powers prevent any kind of real war from happening again.  There is enough Nuclear fire power on this planet to not only destroy Russia completely that even mosquitos will not survive, we could literally blow up the planet Earth into little bits and all float together into space for a final romantic voyage into the nothingness of space.  All this at the press of a button.  Let's hope that the AI systems aren't connected to the Nuke systems!
Military spending in the United States is about $700 Billion and that's just what's on the books.  If you include countries in the Five Eyes - it's much more.  Realistically we are talking about $3 Trillion per year in USD globally by US and friends.  But it's good for the economy giving birth to companies like Google, Facebook, and so many other opportunities to make investors rich beyond their wildest dreams.  That's the 'buy in' - so first you have to suffer.
Earlier this year, the United Kingdom, Australia, Canada and New Zealand – which along with the United States are members of the “Five Eyes” alliance – came together to collectively attribute to Russia what may be the most costly cyber attack in history. This public affirmation provided a rare glimpse into the depth of defense cooperation among the world’s English-speaking democracies.
Formalized in 1955, Five Eyes collaboration has proven a remarkable success both throughout the Cold War and in the post-9/11 era of counterterrorism. The informal alliance has until now remained rooted in intelligence sharing. However, in a world of complex and rapidly evolving security challenges, the Five Eye countries should consider a new area of shared focus: leveraging the commercial technology sector to address common national security concerns.
What that means in 'Plain English' 5 countries got their stories straight for the public.  The answer was "Blame Russia" and the reason was that because with the kind of tools the CIA and NSA has developed they can put Russian fingerprints on virtually any Cyberattack coming out of DC.  Did I just say that out loud?
So to what end?  What is the reason for this horrible mass murder in a Mosque?  At this point we only have circumstantial evidence so let's not jump to any conclusions.  Let's stick with facts.
  • This is the worst attack on peaceful Muslims in their own holy place
  • New Zealand is the most anti-Gun jurisdiction in the world - it's impossible for a normal citizen to obtain and keep a firearm in this place
  • New Zealand is the country with the most internet Censorship in the western world, beaten only by China and North Korea
  • NZ is controlled by the Crown.  Unlike other British Territories like the Bahamas for example, NZ never declared their 'independence' and the Queen is the Queen of New Zealand, visits there, and technically owns all the land.
  • Property in New Zealand is mostly bought 'freehold' (update: should be "leasehold" but the point is that you don't really own it) in that you have a 99 year renewable lease and you never actually 'own' the land like you do in other places.  That may seem like a simple technicality but the fact is there would never be a Rockefeller story in NZ if you discovered $100 Million worth of Gold on your land you can bet you would only get a pittance finders fee for it.  God save the Queen.
Under the Crown Entities Act, Ministers are required to "oversee and manage" the Crown's interests in the Crown entities within their portfolio (sections 27 and 88). The board of the entity has the key role in ensuring the entity is achieving results within budget. This is done by a monitoring department on behalf of the Minister unless other arrangements for monitoring are made. Monitoring departments make explicit agreements with their Minister, setting out what monitoring they will undertake and how they will do it. Crown entity boards should also facilitate clear and transparent monitoring, for example, by providing the Minister and monitoring department with good information on which to make judgements about performance.
Of course, the Reserve Bank, offices of Parliament are completely independent, wink wink righty ho.
Let's take a look at the Kiwi Wall in a little more granular detail to see what's going on here and why this may have been a test run for a larger plot:
The Department of Internal Affairs maintains a hidden list of banned URLs and their internet addresses on a NetClean WhiteBox server, which as of 2009 contained over 7000 websites.[12] The DIA then uses the Border Gateway Protocol to tell ISPs that they have the best connection to those internet addresses.[13]
When a user tries to access a website, the ISP will automatically send their data through the best connection possible. If the user is trying to access a website hosted at an internet address that the DIA claims to have the best connection to, the ISP will divert the traffic to the DIA.[13]
If the website the user is trying to access is on the DIA's list of banned URLs, then the connection is blocked by the WhiteBox server.[13]The user instead sees a filter notice page and has the option of getting counselling or anonymously appealing the ban.[14]
If the website is not on the list of banned URLs, then the DIA transparently passes on the data to the actual website and the user is left unaware that the request was checked.[13]
The happy face is, as you can imagine, pictures of tourists enjoying those expensive bottles of Marlborough white wine riding horses or rich Americans fly fishing.  What is on the 'banned' list?  You guessed it - anything the government or 'ahem' the Crown decides.
So this is much deeper than in the US where the Media is completely controlled by the left - in NZ they control information on a router level!  
So as you can see - in a world where information can be snapped away with an HD cam which is in everyone's pockets, this was the perfect place to run a 'test' of a Military mission of the new kind.
Let's be clear we are not promoting violence.  We believe actually in the dismantling of 90% of the Military as it is useless wasted money.  Keep the nukes, keep the 'banks not tanks' approach and we can spend money on building things that help people with diseases for example or help people live longer or better.  
911 just wouldn't be possible today - or at least to say using the tools that were used back then.  Perhaps with the decline of 'real' Terrorists, this is training for a new generation of artificially created enemies, whether they be 'Nazis' or other types of extremists.  What's clear as more and more info is released it seems as if this was a pro hit job.
And about the gun control debate, this puts to shame anyone that claims banning guns can prevent such attacks, as there is no place in the world that is more strict about Gun Control than New Zealand.  Kiwis are modern Guinea pigs:
IN MEDICINE, trials are conducted on guinea pigs, rats, mice and rabbits. In digital businesses, tests are performed on New Zealanders. Their country is proving the perfect location for software firms, social networks and app developers discreetly to try out and refine their products. Take Microsoft, which last year made New Zealand its first test market for Sway, a new app that helps users create websites, and which has since been released into other markets. Other big technology firms, including Facebook and Yahoo, also use New Zealand as a development lab, as do games companies and small startups.
One wouldn't think of New Zealand as the perfect Terrorist training camp.  But with the internet censorship, its remote location - it appears to be perfect.  We'd like to wish them good luck, but it's unlikely this article will be read inside of the Kiwi Firewall.
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Saturday, March 9, 2019

Meanwhile In HFT Land: One Microwave Tower Is About To Be Blocked By Another Microwave Tower

The small town of Aurora, Illinois – best known for being Wayne‘s hometown in Wayne’s World – has another peculiar appeal to its location: it is one of the closest places that high frequency traders can get to the $63 billion CME Group exchange, where futures and derivatives on commodities and US treasuries trade making it a mecca for HFTs seeking to frontrun slower orderflow. That makes local real-estate extremely coveted, as detailed in a recent Bloomberg follow up to Michael Lewis' "Flash Boys"
The story is familiar to anyone who has been reading this website for the past decade, or leafed through Michael Lewis' HFT thriller: the closer traders can collocate to the CME, the more likely they are to shave off milliseconds from their trades, resulting in frontrunning of slower orderflow that can net them millions. For instance, this small brick hut is owned by New Line Networks a joint venture of HFT giants Jump Trading and Virtu Financial: the two paid $14 million for the land just to be close to the CME Group.


Not happy with the arrangement, Chicago HFT titan DRW Holdings wishes to be even "faster" than Jump and Vitru, and plans to move just a few yards closer to the exchange, having recently put an antenna on a light pole. Next to that is yet another light pole that has been rigged with antennas owned by McKay Brothers, an Oakland-based company. Meanwhile, on nearly all the roads in the area, trading companies have erected antennas or rented space on towers and poles, all of them littered with white circular dishes to try and get closer to the CME data center, all for the purpose of frontrunning slower traders, even if there are still no lasers to be seen, unlike what a visitor to the NYSE in Mahwah, NJ can observe.
As Michael Lewis first hinted in 2014, the real-estate scramble around the exchange had become a turf war between rival HFT corporations until one company decided it was going to do something about the constant jostling back-and-forth between high frequency traders. Dallas-based CyrusOne, which owns the CME center, decided last year that it would finally end the scramble for real-estate by putting up a 350 foot tall wireless tower that would allow anybody to rent space on it. It’s closer than any trading firm could get to the center and targeted putting everybody "on equal footing"... in exchange for a very generous fee to CyrusOne, of course.
And although the tower has room for about 35 satellite dishes but, to this day, remains unused.
Why? Because yet another smaller company, Scientel Solutions LLC, has announced plans to build its own tower about 1000 feet east of CyrusOne's tower, which CyrusOne says would block its own "line of sight" to downstream microwave dishes, and interfere with its communication to and from the CME data center. To prevent this potentially catastrophic development, CyrusOne sued to block Scientel's tower.
And with the litigation ongoing, Scientel's development site remains 2.6 mostly vacant acres that house only a trailer, a portable toilet, and a pile of metal poles.


Amid the legal fray, elected officials in Aurora find themselves confused, trying to figure out which projects should be approved and which projects should be rejected. It appears that the elected officials didn’t initially understand the weight of the decisions that they were making in approving and rejecting these towers. For instance, Alderman Bill Donnell described his technological know-how by saying: “I came from being a guy who didn’t know where the cloud was to realizing speed matters. I didn’t realize being a millisecond faster was all that important."
Actually being a nanosecond faster is just as important, hence the litigation: microwave networks rely on line-of-sight transmissions as microwaves need to be able to "see" the dish they are communicating with. Because of the Earth's curvature, the signal must be relayed from towers that are spaced apart generally every couple of miles. Companies like McKay say that they can process a trade from Aurora to Carteret, location of the Nasdaq data center, or Carteret to Aurora, in 4 milliseconds.


Back in March 2016, when it appeared that HFTs are starting to cannibalize one another, the CME sold its data center building for $131 million. The local government thought it had the issue squared away when it required CyrusOne to lease space to traders on its tower at "fair market rates". The intention was to “equalize wireless access to the CME.”
But when mayor Richard Irving took office, Scientel caught his attention with the company's proposal. They said that they wanted to move their headquarters from another Illinois town to a patch of land near the CME data center. They claimed they would bring 50 jobs at a $100,000/year average salary if the city allowed it to erect a 195 foot tall communication tower on the site. At the time, they pitched it to the city as a way to get more value from the fiber optic ring Aurora had built over the past decade.
They didn’t mention doing business with traders at all.
What they also didn't mention is that by erecting a tower blocking the CME's own microwave "line of sight", it would instantly crush the value of the tower that CyrusOne had built in hopes of collecting millions in rental fees from HFT traders. Instead, should Scientel end up building its own "mega tower" (one which makes the CME's own frontrunning contraption obsolete), it would be the recipient of all those millions in HFT squatting fees.
To this day, the case is still ongoing.
You can red Bloomberg's full long-form write up on the story here.

Thursday, March 7, 2019

World's Most Successful Hedge Fund Manager Ever Reveals Some Of Medallion's Secrets

Two years ago, when profiling the world's most successful hedge fund in history, Bloomberg stared like this:
Sixty miles east of Wall Street, a spit of land shaped like a whale’s tail separates Long Island Sound and Conscience Bay. The mansions here, with their long, gated driveways and million-dollar views, are part of a hamlet called Old Field. Locals have another name for these moneyed lanes: the Renaissance Riviera.
That’s because the area’s wealthiest residents, scientists all, work for the quantitative hedge fund Renaissance Technologies, based in nearby East Setauket. They are the creators and overseers of the Medallion Fund—perhaps the world’s greatest moneymaking machine. Medallion is open only to Renaissance’s roughly 300 employees, about 90 of whom are Ph.D.s, as well as a select few individuals with deep-rooted connections to the firm.
The fabled fund, and we are of course talking about Renaissance Technologies' employees-only Medallion fund, known for its intense secrecy and "black box"-like mystery of what actually goes on there, has produced about $55 billion in profit over the last 28 years, making it about $10 billion more profitable than funds run by billionaires Ray Dalio and George Soros. What’s more, it did so in a shorter time and with fewer assets under management. Just like Berie Madoff, the fund almost never loses money. Its biggest drawdown in one five-year period was half a percent.
“Renaissance is the commercial version of the Manhattan Project,” says Andrew Lo, a finance professor at MIT’s Sloan School of Management and chairman of AlphaSimplex, a quant research firm. Lo credits Jim Simons, the 78-year-old mathematician who founded Renaissance in 1982, for bringing so many scientists together. “They are the pinnacle of quant investing. No one else is even close.”
Yet while many have tried to emulate and reverse engineer Medallion's success, nobody has come close to the inner workings of the world's most successful money machine.
At least until Wednesday, when fabled code-breaker and Renaissance founder, Jim Simons spoke at MIT, at the second of three talks about his iconic career; the talk, which followed last week’s conversation about mathematics and precedes next week’s on philanthropy, attracted an overflowing crowd that included MIT investing chief Seth Alexander. Andre Stern of the U.K.’s Oxford Asset Management introduced Simons.
Simons launched Renaissance after leaving academia and in 1988 started the Medallion Fund, which through last year generated an unrivaled annual average return of about 40 percent, according to calculations by Bloomberg. “That’s net of fees,” Simons said in response to a question from a reporter.
As discussed here extensively in the past, while Renaissance manages money across a handful of funds, the in-house only Medallion evokes the greatest mystery, and as Bloomberg notes, it employs trading strategies to predict price changes in global markets that over three decades no one on Wall Street has been able to replicate. That’s why the U.S. Securities and Exchange Commission came calling after the Bernard Madoff scandal broke in 2008, Simons said.
“They did study us,” said Simons as he spoke about his career in money management. “Of course, they didn’t find anything.”
What was more unique, is that the traditionally media-shy Simons offered a some clues into what sets Renaissance apart:
At the core of the company, which employs about 300 people, Simons said "is a great computing system, good scientists and low turnover." Employees, who get a piece of the profits, sign non-disclosure agreements when they are hired and non-compete contracts after a couple of years on the job.
“It’s fun to work there,” Simons said in a question and answer format led by MIT professor Andrew Lo, who started the quant fund AlphaSimplex Group. “People get paid a lot of money." Some, like former co-CEO Robert Mercer may not find it that much fun to work there, but that's why he recently quit the firm.
According to Simons, the East Setauket-New York company never stops improving its models as it tries to stay a step ahead of the competition, which has flourished in recent years as quant firms attracted more assets than traditional, fundamental shops. Simons stepped down as head of the company in 2010 but remains as non-executive chairman. He said he meets with the company monthly, encouraging management to keep hiring good, young scientists.
Sharing some more details into the company's "secret sauce", Simons said that the Medallion strategy is continually being reinvented, though some parts have remained for as many as two decades. Initially launched as a systematic, trend-following fund that traded in commodities markets, it was losing money after the first six months. So the fund was completely revamped.
Still, the company realized after about 15 years that there were limits on how much Medallion could manage without pushing markets too much, Simons said in a conversation after the talk. So Renaissance finished booting outside investors in the fund in 2005, and since then has sought to limit its size.
While Simons refused to say how much Medallion has in assets, Bloomberg calculations put it at about $10 billion. Simons did say there is about $45 billion in the firm’s other funds, which are still open to outside investors, and generate far smaller returns than Medallion.. They employ longer-term trading strategies, so the funds haven’t delivered the same level of returns as Medallion.
“Yes inefficiencies do get traded out, but the market is dynamic,” Simons said, quoted by Bloomberg, in response to a question from the audience. “There’s room for new inefficiencies to materialize. We keep finding new things and throwing out old things.”
After his talk, students descended on the former mathematician who had broken ground in the field decades ago, winning the American Mathematical Society’s Oswald Veblen Prize in Geometry in 1976.
In the middle of the scrum, Simons vaped, producing a cloud of smoke as he answered more questions.
Below we publish a video recording of the first part of Simons' three part presentations, discussing the role of mathematics in money.
art presentations, discussing the role of mathematics in money.