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October 7, 2024 Coin Telegraph

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August 31, 2024 Bitcoin.com

Avraham Eisenberg Seeks Acquittal of Mango Markets Conviction

August 8, 2024 Bitcoin.com

SBF and Caroline Ellison conspired to keep Bitcoin under $20K, but did it work?

October 16, 2023 Coin Telegraph

Caroline

SBF, Caroline Ellision, Alameda and FTX may have conspired to keep Bitcoin price below $20,000, but is it actually possible and worth the effort?

On Oct. 11, Caroline Ellison, the former head of the now-defunct Alameda Research, informed a U.S. court that she received instructions from FTX's co-founder and CEO, Sam "SBF" Bankman-Fried, to sell Bitcoin (BTC) if its price remained above $20,000.

This admission came as a shock to the entire crypto industry, but the two conspiring to suppress BTC price, versus actually doing it are two different things.

While there are no details available regarding the size and timing of these trades, the timeframe likely falls within September and October 2022, just weeks before Alameda and FTX collapsed.

Determining whether Alameda effectively acted to suppress Bitcoin's price below $20,000, as alleged by some analysts and traders is challenging, if not impossible. Nevertheless, it is possible to assess the significance of FTX's Bitcoin holdings in comparison to other exchanges and the total trading volume.

Look at the Bitcoin wallets

Currently, the only reliable publicly available information pertains to the BTC wallets that previously constituted the exchange's reserves, amounting to less than 47,000 Bitcoin by September 2022, according to Glassnode data. It's possible that Alameda Research held other addresses directly, but given the substantial debt of the trading company, it's unlikely they had any liquid reserves.

One should not assume that FTX used its entire stack of Bitcoin from users since the exchange continued processing client withdrawals until its final day on Nov. 8, 2022. Moving these assets abruptly would have aroused suspicion, potentially accelerating their insolvency. Nevertheless, it's worthwhile to investigate the significance of FTX volumes and holdings.

*Coinbase vs. FTX monthly spot Bitcoin volume, USD. Source: CoinMetrics*

As of July 2022, FTX reported a spot Bitcoin volume of $30 billion, equivalent to $1 billion per day on average. However, relying on these numbers is not advisable, given the exchange's history of data manipulation, as demonstrated by their falsified insurance fund calculation methodology.

Assuming the sales mentioned by Ellison occurred on FTX, a 4,000 BTC order, valued at $80 million at the time, would represent only 8% of the exchange's average daily volume. Furthermore, when considering the total Bitcoin volume from major exchanges, Alameda's speculated order size becomes even more inconsequential.

According to Messari's "real volume" methodology, which excludes wash trading, the aggregate Bitcoin volume was below $3.5 billion per day between September and October 2022. Even if Alameda attempted to sell 25% of their 47,000 BTC holdings in a single day, that $240 million would represent only 7% of the daily volume across major exchanges.

For comparison, in April 2022, MicroStrategy announced the acquisition of 4,167 Bitcoins at an average price of $45,714, totaling $190 million. This likely occurred in late March, with Bitcoin's price increasing by 6%, from $44,580 to $47,270.

*Bitcoin price index (USD), March-April 2022. Source: TradingView*

Two notable aspects of the price action during MicroStrategy's acquisition stand out. First, the price dropped below $46,000 on the same day as the official announcement on April 5, 2022. More importantly, the $48,000 peak appears to correspond to the levels where MicroStrategy completed its execution, resulting in the $45,714 average price.

However, when examining the broader picture, Bitcoin was trading around $39,500 in the two weeks leading up to MicroStrategy's activity and decreased to $39,500 a few weeks later. There is no reason to believe that a single entity could effectively suppress the price for longer than a week, whether it's Tesla unloading $936 million worth of Bitcoin or Alameda liquidating FTX clients' deposits.

To provide some context, Binance held 623,000 Bitcoin in reserves in August 2022, while Coinbase had nearly 690,000 BTC. These two exchanges combined held almost 28 times more Bitcoin than FTX. This fact underscores the limited impact of SBF and Caroline's venture in terms of effective firepower.

In essence, there may have been a few days where Alameda exerted pressure successfully, causing their sales to suppress Bitcoin's price below $20,000. However, considering their reserves and the price action of similarly sized orders, the event was unlikely significant when analyzing a period longer than a month.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin futures open interest jumps by $1B: Manipulation or hedge?

September 19, 2023 Coin Telegraph

bitcoin futures

Bitcoin spiking above $27,200 amid a big jump in open interest has some analysts asking whether BTC’s price is being manipulated.

Bitcoin’s (BTC) open interest on derivatives exchanges experienced a sudden surge of $1 billion on Sept. 18, prompting investors to question whether whales were accumulating in anticipation of the unsealing of Binance’s court filings.

However, a closer look at derivatives metrics suggests a more nuanced picture, as the funding rate did not exhibit clear signs of excessive buying demand.

The decision to unseal these documents was granted to the United States Securities and Exchange Commission, which had accused Binance of non-cooperation despite previously agreeing to a consent order related to unregistered securities operations and other allegations.

*BTC futures aggregate open interest, USD (green, left). Source: CoinGlass*

The open interest spiked to $12.1 billion, while Bitcoin’s price concurrently increased by 3.4%, reaching its highest point in over two weeks at $27,430.

However, investors soon realized that, aside from a comment by the Binance.US auditor regarding the challenges of ensuring full collateralization, there was little concrete information revealed in the unsealed documents.

Later in the day, Federal Judge Zia Faruqui rejected the SEC’s request to inspect Binance.US’ technical infrastructure and share additional information. Nevertheless, the judge stipulated that Binance.US must furnish more details about its custody solution, casting doubt on whether Binance International ultimately controls these assets.

By the end of Sept. 18, Bitcoin’s open interest had receded to $11.3 billion as its price dropped by 2.4% to $26,770. This decline indicated that the entities behind the open interest surge were no longer inclined to maintain their positions.

These whales were likely disappointed with the court’s outcomes, or the price action may not have unfolded as expected. In any case, 80% of the open interest increase disappeared in less than 24 hours.

Futures’ buyers and sellers are matched at all times

It can be assumed that most of the demand for leverage was driven by bullish sentiment, as Bitcoin’s price climbed alongside the increase in open interest and subsequently plummeted as 80% of the contracts were closed. However, attributing cause and effect solely to Binance’s court rulings seems unwarranted for several reasons.

Firstly, no one anticipated that the unsealed documents would favor Binance or its CEO, Changpeng “CZ” Zhao, given that it was the SEC that had originally requested their release. Additionally, the Bitcoin futures contract funding rate, which gauges imbalances between long and short positions, remained largely stable throughout this period.

*BTC futures average 8-hour funding rate. Source: CoinGlass*

If there had indeed been an unforeseen demand surge of $1 billion in open interest, primarily driven by desperate buyers, it’s reasonable to assume that the funding rate would have spiked above 0.01%. However, quite the opposite unfolded on Sept. 19, as Bitcoin’s open interest expanded to $11.7 billion, while the funding rate plunged to zero.

With Bitcoin’s price rallying above $27,200 during this second phase of open interest growth, it becomes increasingly evident that, regardless of the underlying motives, the price pressure tends to be upward. While the exact rationale may remain elusive, certain trading patterns could shed light on this movement.

Market makers’ hedge could explain OI spike

One plausible explanation could be the involvement of market makers in executing buy orders on behalf of substantial clients. This would account for the initial enthusiasm in both the spot market and BTC futures, propelling the price higher. After the initial surge, the market maker becomes fully hedged, eliminating the need for further buying and leading to a price correction.

During the second phase of the trade, there is no impact on Bitcoin’s price, as the market maker must offload the BTC futures contracts and purchase spot Bitcoin. This results in a reduction in open interest and may disappoint some participants who were anticipating additional buying fervor.

Rather than hastily labeling every “Bart” formation as manipulation, it is advisable to delve into the operations of arbitrage desks and carefully analyze the BTC futures funding rate before jumping to conclusions. Thus, when there is no excessive demand for leveraged long positions, an increase in open interest does not necessarily signify a buying spree, as was the case on Sept. 18.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Binance, Coinbase and Gemini staff are among the least happy, data suggests

July 6, 2023 Coin Telegraph

amber group

Crypto exchange Binance said its “hardcore” work culture could explain some of the results, while recruiters warn the data should be taken with a grain of salt.

Crypto exchanges, including Gemini, Binance and Coinbase, are home to some of the least happy employees in the industry, according to data derived from Glassdoor — though some argue the results may be skewed.

A quadrant chart by tech recruitment firm TrueUp — understood to have collated data from job review platform Glassdoor — mapped out how crypto firms stack up regarding employee happiness vs. growth.

27 of the most valuable cryptocurrency firms were placed on TrueUp’s quadrant chart.

*A chart depicting the happiest, least happy workers and fastest and slowest growing cryptocurrency firms. Source: TrueUp*

The chart shows defunct crypto lender Celsius, crypto exchange Gemini and crypto trading firm Amber Group, with the least happy employees, according to data gleaned from 80, 139 and 42 reviews, respectively.

Binance and Coinbase also appear on the left side of the chart, with the respective Glassdoor listings showing a total of 1,257 reviews.

Glassdoor doesn’t have a happiness metric, but it does gauge whether the reviewer would recommend the company to a friend, whether they approve of the CEO they worked under, and whether the reviewer had a positive outlook for the company.

Binance attributes score to ‘hardcore’ values

Speaking to Cointelegraph, a Binance spokesperson explained that the firm seeks to hire candidates “who can thrive in a truly high-performance environment” in addition to being “obsessively focused on delivering for our users.”

They explained that not every Binance employee is cut out to be “hardcore” — one of the firm’s core values:

“It also means that sometimes, we have some who are not able to thrive in this unique, brutally fast environment, and we have to accept some negative reviews as a result.”

“Negative feedback enables us to address problems, and we’re on a constant journey to improve our employee experience,” the Binance spokesperson added.

*Glassdoor summary of Binance. Source: Glassdoor*

Cointelegraph also reached out to Coinbase, MoonPay, Bitpanda and 21Shares for comment but did not receive a response by publication. Gemini declined to comment.

Glassdoor concerns

Glassdoor reviews are user-submitted, self-reported information. In 2017, recruiters raised concerns over the legitimacy of Glassdoor data, suggesting that reviews can be easily faked or manipulated.

However, Glassdoor states that every review goes through a “moderation process” before it is approved for publication on its website.

Neil Dundon, the founder of Crypto Recruit, told Cointelegraph that while the Glassdoor data is “speculative,” it appears as though employees “building infrastructure” are more satisfied than those working at exchanges:

“The sadder employees may not be as fulfilled given they are working in a more speculative/exchange environment whereas the right side are actually building infrastructure for blockchain, so these employees may feel they have more purpose in their work.”

The large staff layoffs among top-tier firms have likely been factored into the figures, Dundon suggested.

“Across the industry in general, though, it’s hard to feel happy in your job when there is underlying insecurity among employees with all of the layoffs that have happened over the last year,” he said.

The silver lining, according to Dundon, is that “the worst” may be behind crypto employees now.

Meanwhile, the TrueUp chart suggests the “happiest” workers in the industry came from Ava Labs, the team behind the Avalanche blockchain; cryptocurrency exchange and wallet provider Blockchain.com; and Fireblocks, an institutional digital asset custodian.

Glassdoor data also shows that Alex Mashinsky, the founder and former CEO of the now-bankrupt cryptocurrency lending platform Celsius, was one of the industry’s most disliked CEOs, with only 27% of past and present Celsius employees “approving” of him.

Brian Armstrong and Changpeng “CZ” Zhao, the CEOs of Coinbase and Binance, respectively, have 69% and 65% approval ratings — lower than average for technology-based CEOs.

Magazine: Can you trust crypto exchanges after the collapse of FTX?

Report Suggests FTX’s Tokenized Stocks Might Not Have Been Backed 1:1, Synthetics May Have Been Used to ‘Manipulate’ Real Stock Prices

December 6, 2022 Bitcoin.com

Analyst says 40% of users in most Web3 games are bots — Here’s how to avoid being fooled

August 31, 2022 Coin Telegraph

Coin Telegraph

In DApps, daily active users is an easy metric to manipulate. Let’s review a few ways to cross-reference the authenticity of the metric.

The decentralized application industry pushed above $40 billion in smart contract deposits in February 2021, and currently the figure stands at $59 billion. To date, “real money” continues to flow into the sector, and on Aug. 29, gaming startup Limit Break raised $200 million. The project gained popularity after the successful launch of its DigiDaigaku free-mint NFT collection.

According to a report by Dove Metrics and Messari, the crypto industry saw $30.3 billion in funds raised in H1 2022. This amount surpassed the $30.2 billion seen in 2021. Excluding the $10.2 billion in funding raised for the centralized finance sector leaves a whopping $20 billion that was invested in DApps, nonfungible tokens (NFTs) and Web 3 infrastructure.

One might question how much of that money has effectively been deployed or reinvested in ventures owned by the same investment groups. Of course, there are a handful of clever ways to overextend those announcement numbers without breaking any regulation, but there's undoubtedly a great deal of money flowing toward decentralized applications.

There’s always been a healthy amount of distrust in the actual number of active users on DApps, but so far, no hard evidence of cheating has been presented. So what tools can retail users employ to detect inflated activity? Well, it turns out there are at least three: active users, community engagement and liquidity.

Comparing registered users to active users

Most proof of stake (PoS) networks charge minimal registration fees and many are free to use. This leads to troves of “fake” active addresses that interact with the DApp and it creates incentives for developers and investors to boost their numbers.

Filtering the DApps rankings by the number of users brings some staggering data, especially in the Tron, WAX, Flow, EOS and Thundercore networks. Some of the DApps claim to have more active users than industry leaders like OpenSea, Uniswap and Axie Infinity.

Levan Kvirkvelia, the co-founder of Jugger, a Web3 bot prevention service, analyzed over 60 games and DApps and found that 40% of the active users are actually automated bots or a single entity controlling multiple accounts.

after analyzing 60+ games and services, we found 200 000 bots. on average, every web3 game has 40% bots.

link to the database with the results at the end of a thread pic.twitter.com/vvvuhgeRLV
— Levan (@LevanKvirkvelia) August 29, 2022

In some cases, such as the AnRKey X game on the Polygon network, the ratio of bots to holders reached 84%. Even though there could be a plausible explanation for distancing the project developers from the bot deployment, Kvirkvelia's research shows that analysts should not use the number of token holders as a proxy for active users.

Faking community engagement is incredibly hard

A sign to look out for is inconsistent community engagement on the project's social networks even if the DAU metric is high. Well funded projects aim to “buy” real users whereas bots are not skilled enough to contribute to discussions in a meaningful and consistent way.

This analysis doesn’t take longer than 10 minutes because it only requires one to log in to the official group and scroll through the last 40 or 60 messages. Are there real questions and constructive debates by the community or merely activity from group admins and shilling from bot accounts?

Moving on to the project's official Twitter, Twitch, YouTube or Instagram page, follow the same process of reviewing posts and comments from the community. This qualitative data should yield a far more accurate analysis versus the number of shares, likes or active blockchain addresses.

Detecting fake token liquidity

Believe it or not, market makers offer liquidity services for tokens. For a certain fee, they can keep bids and offers at reputable exchanges at all times, moving the price using algorithms based on the orderflow.

An experienced investor will note nuances that distinguish fake volumes and order book depth from actual trading activity. For starters, analyzing the 2% depth on bids and offers provides an easy way to avoid illiquid tokens.

*UFO Gaming (UFO) top markets by volume. Source: Coinmarketcap*

Notice how the UFO Gaming token holds an unreasonably low amount of bids compared to its daily trading volume. The aggregate demand from buyers is 2% below the last trade and is less than 0.6% of the reported trading volume.

While having a market maker is usually a good thing since it encourages users to trade the token actively, it does not necessarily translate to trading volume. Dissipating interest from the community eventually causes the token liquidity to plunge.

*Orchid Protocol (OXT) top markets by volume. Source: Coinmarketcap*

The example above shows Orchid Protocol token, which despite being listed on Binance, Coinbase, Kraken and Kucoin, amasses $675,000 in daily volume. This effect causes the 2% order book depth to range between 9% to 47% of the daily trading activity, which sounds quite off.

Investors should be aware that venture capitalists and market makers are becoming even more skilled at hiding their manipulation. For instance, finding a top-200 coin at Binance with distorted ratios on daily volume and order book depth is almost impossible. Traders, gamers and investors should take care to not be misled by high DAU metrics for popular DApps. Doing qualitative analysis of the platform’s social media accounts and GitHub is a great way to cross-reference on-chain and trading data.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Celsius Was “Absolutely Trading CEL to Manipulate the Price”: Former Exec

July 20, 2022 The Crypto Briefing

Markets rally after FOMC meeting, but Bitcoin bears still have a short-term advantage

December 16, 2021 Coin Telegraph

Coin Telegraph

Bitcoin, altcoins and stocks rallied shortly after the Fed laid out its policy roadmap for 2022, but bears still have an advantage in this week $755 million options expiry.

Bitcoin's (BTC) price has been in a down-trend since the $69,000 all-time high on Nov. 10, when the the Labor report showed inflation pushing above 6.2% in the United States. While this news could be beneficial for non-inflationary assets, the VanEck physical Bitcoin exchange-traded fund (ETF) denial by the U.S. Securities and Exchange Commission (SEC) on Nov. 12 threw some investors off-guard.

*Bitcoin/USD price on Coinbase. Source: TradingView*

While the ETF request denial was generally expected, the reasons given by the regulator may be worrisome for some investors. The U.S. SEC cited the inability to avoid market manipulation on the broader Bitcoin market due to unregulated exchanges and heavy trading volume based on Tether's (USDT) stablecoin.

Analyzing the broader market structure is extremely relevant, especially considering that investors closely monitor meetings held by the U.S. Federal Reserve. Regardless of the magnitude of the upcoming tapering in the Fed's bond and assets repurchase program, Bitcoin's movements have been tracking the U.S. Treasury yields over the past 12 months.

*Bitcoin/USD at FTX (orange, left) vs. U.S. 10-year Treasury Yields (blue, right). Source: TradingView*

This tight correlation shows how decisive the Federal Reserve's monetary policy has been with riskier assets, including Bitcoin. Moreover, the yield decline over the past three weeks from 1.64 to 1.43 partially explains the weakness seen in the crypto market.

Obviously, there are cother factors in play, for example, the market pullback on Nov. 26 was primarily based on concerns over the new COVID-19 variant. Regarding derivatives markets, a Bitcoin price below $48,000 gives bears complete control over Friday's $755 million BTC options expiry.

*Bitcoin options aggregate open interest for Dec. 17. Source: Coinglass.com*

At first sight, the $470 million call (buy) options overshadow the $285 million put (sell) instruments, but the 1.64 call-to-put ratio is deceptive because the 14% price drop since Nov. 30 will likely wipe out most of the bullish bets.

If Bitcoin's price remains below $49,000 at 8:00 am UTC on Dec. 17, only $28 million worth of those call (buy) options will be available at the expiry. In short, there is no value in the right to buy Bitcoin at $49,000 if it is trading below that price.

Bears are comfortable with Bitcoin below $57,000

Here are the three most likely scenarios for the $755 million Friday's options expiry. The imbalance favoring each side represents the theoretical profit. In other words, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:

Between $45,000 and $47,000: 110 calls vs. 2,400 puts. The net result is $105 million favoring the put (bear) options.
Between $47,000 and $48,000: 280 calls vs. 1,900 puts. The net result is $75 million favoring the put (bear) instruments.
Between $48,000 and $50,000: 1,190 calls vs. 1,130 puts. The net result is balanced between call and put options.

This crude estimate considers call options being used in bullish bets and put options exclusively in neutral-to-bearish trades. However, this oversimplification disregards more complex investment strategies.

For instance, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin (BTC) above a specific price. But, unfortunately, there's no easy way to estimate this effect.

Bulls need $48,000 or higher to balance the scales

The only way for bulls to avoid a significant loss in the Dec. 17 expiry is by sustaining Bitcoin's price above $48,000. However, if the current short-term negative sentiment prevails, bears could easily pressure the price down 4% from the current $48,500 and profit up to $105 million if Bitcoin price stays below $47,000.

Currently, options markets data slightly favor the put (sell) options, thus creating opportunities for additional negative pressure.

manipulation