Comment by gruez | Hacker News Reader

Comment by gruez | Hacker News Reader

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> I believe OP is saying when they can't cover orders, they pull the plug on the market rather than be overexposed.

I still have trouble picturing how this conspiracy would work. I assume it involves coinbase pumping bitcoin prices with money that they don't have. They pump it all the way up, realize "oh shit we don't have enough real money to cover the fake money", and then pull the plug to stop the bleed? Can't they decide ahead of time how much money they can safely spend and stop accordingly? Why do they need to halt trading? If they stop pumping, and the price continues to rise, that doesn't cause them to lose any more money, because it's just other people trading with other people.

>As far as server load goes up, by how much does it need to increase to cause a problem? Are the numbers feasable, eg 100x volumes?

It's kind of hard to tell just by looking at the charts. Just because trade volume is low doesn't mean load on the order matching engine is low. If you spam the trading engine with tons of non-marketable orders, nothing will get executed (no volume), but the order matching engine will still have to wade through those orders.

> I still have trouble picturing how this conspiracy would work.

Not saying that Coinbase does this, but incoming wires/ACH/whatever continue to roll in during an outage, but they can stop the initiation of any outgoing xfers, and then be slow with them claiming a backlog.

A big Canadian exchange, quadrigacx that blew up ~2 years ago was doing all sorts of tricks like this. Their bankruptcy is still ongoing, but somehow ~9 dollar in 10 went missing. The other 1 of 10 was frozen by a bank and eventually returned as $5m bank drafts that no bank would accept.

Kinda like "Your money is in Bill's house, and Fred's house", except Bill and Fred didn't have houses.

>Not saying that Coinbase does this, but incoming wires/ACH/whatever continue to roll in during an outage, but they can stop the initiation of any outgoing xfers, and then be slow with them claiming a backlog.

That would only make sense if coinbase was down for several days at a time. If it was only down for a few hours then that's nearly not enough time for enough money to flow in (aren't wire transfers batched per day rather than processed in real time?). It also doesn't answer my earlier question of "why don't they just stop pumping before they run out of money?".

>A big Canadian exchange, quadrigacx that blew up ~2 years ago was doing all sorts of tricks like this.

Perhaps that's exactly what's happening at coinbase, but pointing to them being down when there's high trading volume isn't a convincing argument.

> If it was only down for a few hours then....

All depends how stuck they are.

When it comes to bitcoin exchanges, there really is no need for conspiracy theories - there have been multiple high profile stories of very large players engaged in fraud, embezzlement, and duplicitous price fixing, and they are completely unregulated.

Your confidence in coinbase, given they are unregulated in any meaningful way, is IMO misplaced.

>Your confidence in coinbase, given they are unregulated in any meaningful way, is IMO misplaced.

I think you're reading too much into my comment. I wasn't trying to claim that cryptocurrency exchanges didn't engage in shady behavior, I was only claiming that the specific accusation of "they halted trading because of liquidity issues from their pumping" didn't make any sense.

> When it comes to bitcoin exchanges, there really is no need for conspiracy theories

You're saying you don't think that any existing exchanges are conspiring (or have conspired) to defraud?

> there have been multiple high profile stories of very large players engaged in fraud, embezzlement, and duplicitous price fixing, and they are completely unregulated.

Doesn't this make such theories more plausible, not less?

You are incorrect. Coinbase regularly gets audited practically every other week by some random regulating body in the country. I’d say ask someone who works there, but you probably won’t as calling any Crypto exchange as ‘Bitcoin’ exchange is something that died off around 2015.

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