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Posted
15 hours ago, Parsad said:

 

All of the assets you mention can be confiscated by law enforcement.  Recently, BC is enacting new laws so as to be able to confiscate assets from people and organizations that can't prove where the wealth came from...believe it or not, the new Premier is extremely left wing, but is enacting some pretty centrist or right wing policies! 

 

Yet, it is extremely difficult still to confiscate crypto currency from criminal players.  Yes, they can trace some assets that they were having a hard time tracing in the past, but it certainly is harder to get your hands on those crypto assets compared to diamonds, gold, real estate, stocks, watches, etc.  Cheers!

 

The governments of the world not being able to confiscate your wealth could be considered a feature, rather than a bug.

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Posted (edited)
2 hours ago, rkbabang said:

 

The governments of the world not being able to confiscate your wealth could be considered a feature, rather than a bug.

 

+1 

 

The wallets can be tracked, identified, blacklisted by established institutions, prevented from transacting to underlying fiat, etc etc etc. 

 

But as long as someone is willing to to transact with you directly, and accept the risks of doing so, you can still use the crypto itself. 

 

Terrorist organizations? Crime rings? Drug dealers? Might have a much harder time finding individuals to transact with who are willing to accept the ire of world governments for accommodating black listed wallet addresses and might also find themselves blacklisted. 

 

Individuals fleeing repressive regimes with their crypto intact likely find much less difficulty in transacting and getting the crypto off chain regardless of whatever monitoring/doxxing their govt does. 

 

Edited by TwoCitiesCapital
  • 3 weeks later...
Posted

An interesting story that reinforces TwoCitiesCapital point about crypto being trackable. Quadrigacx was an exchange run by a canadian CEO who mysteriously "died" in India a couple years ago, and the exchange was missing $200M in crypto (would be worth more today if it still exists, but the actual $200M might never have been in crypto either, he may have just siphoned it directly according to Wikipedia). The CEO was the only one with the keys so no one can access the wallets and the restructuring accountants accidently transferred 100 BTC to the CEO's cold wallets after he died, so it was though unrecoverable.

 

But guess what? 2 days ago someone with the keys to those wallets transferred the 100 bitcoin to other wallets and started transferring them through mixing services to obfuscate who owns them. So clearly BTC isn't anonymous, we can see "who" moves bitcoins even if we don't know "who" they are. If Satoshi awoke from his long nap and started selling some of their billions in crypto we'd know within minutes.

 

https://www.coindesk.com/policy/2022/12/19/bitcoin-addresses-tied-to-defunct-canadian-crypto-exchange-quadrigacx-wake-up/

 

So the hard part with crypto is at the crypto->cash layer, where know your customer rules can catch you. So TCC is right, if your crypto is known proceeds of a crime getting it converted to cash is hella difficult. Where crypto is useful is when no one knows your crypto is proceeds from crime. I'm sure there are lots of low level criminals who slowly convert dirty cash into crypto thinking that the cops won't bother to connect their transactions to their crimes. 

 

When you have millions or hundreds of millions or billions, it gets much harder. The best schemes I've heard of is to try to use it to manipulate some small cap shitcoins price to profit from the price swings. For example, let say you have a $100M in bitcoin, so you target crypto with a total $100M market cap, 100M coins at $1 that might trade $1M a day. You slowly buy 1M coins in a "clean account" using $1M in clean funds, maybe a loan. Then you use your dirty account to buy a massive amount of coins so quickly that you drive the price to $10, and sell your 1M clean coins to your dirty account for $10M. Now you have $10M in clean cash you made from "trading crypto". Maybe you spent $10M of your dirty money to drive the price up, so the total cost was $20M to launder $10M.

 

You might find that a fair swap on its face. But you probably could get it done for far less, and the coin might not trade back down to $1, you might be able to sell all the coins from your dirty account for most of the $20M cost so your actual cost is only a few million and you could do it again and again with different coins before you run out of "dirty" coins.

Posted

The key assumption here is that to get the money out, the blacklisted wallet has to sell its BTC. Utter crap!

The BTC is simply put up as collateral on a stable coin, a derivative, a loan etc. The off-ramp vehicle over collateralized enough to ensure that there will never be a default, and a need to collect. 

 

SD

Posted
On 11/30/2022 at 9:02 AM, TwoCitiesCapital said:

 

+1 

 

The wallets can be tracked, identified, blacklisted by established institutions, prevented from transacting to underlying fiat, etc etc etc. 

 

But as long as someone is willing to to transact with you directly, and accept the risks of doing so, you can still use the crypto itself. 

 

Terrorist organizations? Crime rings? Drug dealers? Might have a much harder time finding individuals to transact with who are willing to accept the ire of world governments for accommodating black listed wallet addresses and might also find themselves blacklisted. 

 

Individuals fleeing repressive regimes with their crypto intact likely find much less difficulty in transacting and getting the crypto off chain regardless of whatever monitoring/doxxing their govt does. 

 


I’ve mentioned this before but you act like terrorist and drug cartels have some centralized slush fund with billions of dollars when the reality is that these organizations control thousands of people with tens or hundreds of thousands of small accounts. No doubt our government has the technology to monitor account, but certainly not the capacity to throw a wide enough net. 

Posted
2 hours ago, RedLion said:


I’ve mentioned this before but you act like terrorist and drug cartels have some centralized slush fund with billions of dollars when the reality is that these organizations control thousands of people with tens or hundreds of thousands of small accounts. No doubt our government has the technology to monitor account, but certainly not the capacity to throw a wide enough net. 

 

And somehow BTC is worse than cash in this regard? Does cash not also require the monitoring/blacklisting of thousands of people, but with NO way to possibly track? 

 

Maybe it's cash that should be illegal?

 

As an aside, that's probably exactly what governments will aim to do once CBDCs are widespread. And we should all be concerned because CBDCs carry few of the benefits of decentralized crypto and a whole host of new negatives - like usurping more of your civil liberties around privacy and autonomy around spending. 

Posted
29 minutes ago, TwoCitiesCapital said:

 

And somehow BTC is worse than cash in this regard? Does cash not also require the monitoring/blacklisting of thousands of people, but with NO way to possibly track? 

 

Maybe it's cash that should be illegal?

 

As an aside, that's probably exactly what governments will aim to do once CBDCs are widespread. And we should all be concerned because CBDCs carry few of the benefits of decentralized crypto and a whole host of new negatives - like usurping more of your civil liberties around privacy and autonomy around spending. 

 

Suddenly the IRS knows exactly how much the neighborhood kid who cuts your lawn is making and wants their cut.  They know you sold some old stuff on Craigslist for $5K last year, do you have receipts for when you bought all that stuff to prove your cost basis?   Probably not.   CBDCs are a nightmare.

Posted
56 minutes ago, rkbabang said:

 

Suddenly the IRS knows exactly how much the neighborhood kid who cuts your lawn is making and wants their cut.  They know you sold some old stuff on Craigslist for $5K last year, do you have receipts for when you bought all that stuff to prove your cost basis?   Probably not.   CBDCs are a nightmare.

 

What percentage of required Venmo transactions do you think are going to be reported? I'm guessing its going to be pretty low

Posted
1 hour ago, TwoCitiesCapital said:

 

And somehow BTC is worse than cash in this regard? Does cash not also require the monitoring/blacklisting of thousands of people, but with NO way to possibly track? 

 

Maybe it's cash that should be illegal?

 

As an aside, that's probably exactly what governments will aim to do once CBDCs are widespread. And we should all be concerned because CBDCs carry few of the benefits of decentralized crypto and a whole host of new negatives - like usurping more of your civil liberties around privacy and autonomy around spending. 

 

e.g. Having a network of criminals across Europe and the americas with USD or EUR bank accounts or physical currency stockpiles does not offer the same utility as tens of thousands of wallets that can transact digitally. 

 

I totally agree with your previous comments that the USD is the world's crime reserve currency, there's certainly more crime and terror and oil and houses and everything else that transact in USD vs. BTC or EUR or AUS, etc. 

 

It's funny because I think we have similar views on this, I'm certainly all in favor of civil liberties, smaller government, and more freedom in general. I just have two issues with investing in BTC (and I would be a lot richer if I didn't, notwithstanding the 80% drawdown):

 

1) I don't know how to value this, and don't see why this won't this get displaced by new technology or a new speculative whim (tulips/watches/NFTs/whatever). 

2) I see a big risk of government regulation/crackdown that may or may not make crypto less attractive as an investment/speculative vehicle. I think maybe I'm just being paranoid and this fear is overblown, I think if the government is going to crack down on crypto it's going to happen soon as our legislation in the US tends to be reactionary in nature. 

 

Best of luck to you with your position, I certainly won't bet against you. 

Posted (edited)
58 minutes ago, RedLion said:

 

e.g. Having a network of criminals across Europe and the americas with USD or EUR bank accounts or physical currency stockpiles does not offer the same utility as tens of thousands of wallets that can transact digitally. 

 

I totally agree with your previous comments that the USD is the world's crime reserve currency, there's certainly more crime and terror and oil and houses and everything else that transact in USD vs. BTC or EUR or AUS, etc. 

 

It's funny because I think we have similar views on this, I'm certainly all in favor of civil liberties, smaller government, and more freedom in general. I just have two issues with investing in BTC (and I would be a lot richer if I didn't, notwithstanding the 80% drawdown):

 

1) I don't know how to value this, and don't see why this won't this get displaced by new technology or a new speculative whim (tulips/watches/NFTs/whatever). 

2) I see a big risk of government regulation/crackdown that may or may not make crypto less attractive as an investment/speculative vehicle. I think maybe I'm just being paranoid and this fear is overblown, I think if the government is going to crack down on crypto it's going to happen soon as our legislation in the US tends to be reactionary in nature. 

 

Best of luck to you with your position, I certainly won't bet against you. 

 

The US has had an opportunity to crack down in it for 13 years. So far all they've done is tax it (read 'make legitimate') and a minimal regulatory approach. At this point, I think it's be pretty hard for them to backtrack. 

 

Maybe in 2018? But now? With major institutions having backed it, invested in it, supported it? If you believe money influences politics, I think the time for banning has long passed...

 

My general view is that there is a utility to crypto in the form of being sound money. And being digitally native gives it competitive advantages as payment facilitator over the current network. 

 

These benefits will grow as the network grows and thus demand for the token will grow while new supply basically is non-existent. What SHOULD it trade for? 🤷‍♂️ 

 

But should it trade higher in 10-years than it does today when it is the default option for long term wealth storage and a global payments system is operating on top of it? Absolutely. And how valuable is that system? Probably quite a bit more valuable than the $1.2 trillion peak we saw in BTC in 2021 IMO. 

Edited by TwoCitiesCapital
Posted (edited)

CBDC (Yin) and BTC (Yang) are the payment extremes; they each serve their own market extremely well, and neither is going out of business.

However, going forward, the cost of transacting will include a charge for privacy. If you are fine with your payment being tracked (most people), welcome to the very material transactional cost reductions of CBDC. But if you want extreme security and privacy - welcome to the mining charges of BTC. You decide how much privacy is worth to you.

 

However, the more that CBDC collectively replaces cash bills in circulation, the more black market activity it drives onto BTC - simply because you need cash bills to settle anonymously. And with fewer bills now in circulation, you now need to use off-chain BTC, and will ultimately drive up the money in-flows into BTC. On that fixed BTC supply - BTC prices must rise.

 

Better still, every one of those off-chain BTC transactions includes profit, so money in-flows will continually rise. Simply because if I take out 10 BTC to pay for my goods/services, and return 15 BTC after I've sold everything, I have increased BTC money in-flow by the fiat cost of my 5 BTC profit. And the more people doing this ... the more cumulative money in-flow into BTC.   

 

And money in-flows will NEVER cap out as long as the CB continues to debase its currency at a target inflation rate. If there is USD 100B (easy numbers example) of currency in circulation, and 15% black market activity (example purposes), a 2% target inflation rate adds 0.3B (0.02x 100B x 15%) to BTC money in-flows. Divide over 21M BTC, and it's potentially a rise of 14K/BTC - this year. And as the fiat continues to debase ....  BTC continues to rise. 

 

Welcome to the design of BTC.

 

SD

Edited by SharperDingaan
Posted (edited)
1 hour ago, Parsad said:

My whole point when I started this thread:

 

https://finance.yahoo.com/news/u-charges-accused-mango-crypto-223055202.html

 

If this one guy can manipulate a smaller crypto market by himself, why couldn't larger players manipulate larger cryptocurrencies?  Without more oversight, regulation and disclosure, there is no reliability at all around any current cryptocurrencies.  

 

Cheers!

 

This is going to be an interesting case. He is going to argue that he didn't do anything illegal, merely exploited rules that a poorly run exchange allowed, and it will be interesting to see how that plays in court. IIRC he ran up the value of a thinly traded shitcoin in a very short period, borrowing as much as allowed from an automated margin bot before the coin crashed. Matt Levine pointed out this very same problem with FTX and other exchanges, where their systems weren't smart enough to not loan out excessive amounts for thinly traded coins that spiked.

 

I suspect that the prosecution will try to argue this is market manipulation that should be just as illegal for crypto as it is for stocks and commodities.

 

And there are similar problems with Ethereum smart contracts where clever developers poor over them to find mistakes they can exploit to loot their pools of coins. Its not going away any time soon.

Edited by ValueArb
Posted

Nah, this is just working the box!  https://thedeepdive.ca/how-market-manipulation-works/

 

There was a time when one of the best at this, did his thing at the VSE. Widely acknowledged as a master grifter at his trade, he contributed 'technical details' to a ghost written 'hits list' history of Vancouver Stock Exchange scandals, that subsequently became the 'manual'. Originally intended as a joke bet (and tax write-off), the history was privately published in a small print run; 20 copies of which were signed by him, each with a different message (penalty for losing a bet). 

 

If you ever get to read the 'manual', you will very quickly recognize how good he was really was - and its potential application to a great many other industries!  Sadly the man is dead now ..... but those 'manuals' are going to live on for a very long time!!

 

SD

 

 

Posted
4 hours ago, SharperDingaan said:

Nah, this is just working the box!  https://thedeepdive.ca/how-market-manipulation-works/

 

There was a time when one of the best at this, did his thing at the VSE. Widely acknowledged as a master grifter at his trade, he contributed 'technical details' to a ghost written 'hits list' history of Vancouver Stock Exchange scandals, that subsequently became the 'manual'. Originally intended as a joke bet (and tax write-off), the history was privately published in a small print run; 20 copies of which were signed by him, each with a different message (penalty for losing a bet). 

 

If you ever get to read the 'manual', you will very quickly recognize how good he was really was - and its potential application to a great many other industries!  Sadly the man is dead now ..... but those 'manuals' are going to live on for a very long time!!

 

SD

 

 

 

Who are you talking about?  Murray Pezim?  Cheers!

Posted
13 hours ago, Parsad said:

Some of the numbers of manipulation of crypto markets is mind boggling if accurate!  Cheers!

 

https://www.thestreet.com/investing/cryptocurrency/billionaire-mark-cuban-warns-of-potential-new-crypto-scandal-fraud?puc=yahoo&cm_ven=YAHOO

 

I posted this on the other crypto thread but in case you didn't see it it's worth a read. The scam in exchanges is apparently to mint your own coins, run up its price by trading it against yourself, and then use that to cover the growing hole in your balance sheet. FTX did it, Binance lis doing it, and more than a few smaller exchanges doing it.

 

https://dirtybubblemedia.substack.com/p/the-binance-scam-chain

Posted

It wasn't Murray; let the poor man rest in peace!

It would also seem that the 'manual' got sanitized, and spawned  "The Dirty Rotten Secrets of the Small Cap Markets" 😙

https://sites.google.com/site/chartinganalysis/home/murray-pezim-rules-of-trading

 

A favorite are these three:

 

22. THE SPOUSE FACTOR. This could also be a corollary to Murphy's Law for a deal. The wife wants a new house, a new car, etc. And the promoter or insider sells, sells, sells to afford these new toys. Down goes the stock price.

 

37. THE SECRET OF THE NEWSLETTER WRITER. Any newsletter writer providing ongoing reportage on Canadian mining or small cap stocks has a vested interest, whether disclosed or not. Someone is paying the freight and rarely is it the subscriber. (The writer either has a position or is being paid or hopes to become "famous" by covering a specific stock.) Publishing a newsletter is a very expensive proposition, with a high casualty rate. Look at which "popular" newsletters were published during the late 1960s or the early 1980s and see if any are still being published today.

 

50. THE ULTIMATE RULE. Paper is paper and cash is cash. The only reason you are holding paper instead of cash is you honestly believe your paper will eventually be worth more than the cash. Amateurs buy paper. Professionals convert their paper to cash. Cash is King. Paper is essentially worthless if there are no buyers.

 

Always marry richer than you are, use media columnist's as 'beaters', hold your core capital in fully paid off houses and treasuries !!! 

... and may you never be out of renters!

 

SD

Posted

Just an observation, but some of the recent price action on BTC looks a bit like a currency peg.

 

The only other time I remember sideways price action like this is CB interventions.

Posted (edited)

And in the meantime when prey is running frantically anything with animal instinct turbocharged with envy is going to pursue.  Let's enjoy watching and/or participating in this chase of Bitcoin.  

 

 

Edited by dealraker
Posted (edited)
12 hours ago, Parsad said:

https://finance.yahoo.com/news/crypto-lender-gemini-just-filed-162115354.html

 

In a week when another large crypto exchange goes under, BTC prices rise...hmmm!  Cheers!

 

Probably because it's been known for a few weeks now that they would file and they were already working attempting to iron out a plan with creditors before the official filing.  #BuyTheRumorSellTheNews

 

It was a few weeks back that there was speculation that DCG would have to liquidate GBTC to settle some of the shortfall at Genesis. That's what took GBTC to a ~50% discount to NAV - though those fears are totally unfounded due to the legal structure of the Trust (AND liquidation would actually be bullish for NAV closure allowing a significant arbitrage). 

 

I doubt that the bounce is the start of a new bull market, but the narrative I was seeing everywhere is that the BTC bottom was going to be between $9-12k. They might still be right, but if everyone was positioned for that then we were ripe for a short squeeze and hundreds of millions of short positions have been liquidated thus far. 

 

On a related note, the Timothy Peterson guy I follow notes that Bitcoin is sensitive to interest rates if you're looking at the right rates. It's not the Fed funds. It's not the 10-year Treasury. It's the high yield spread.

 

His back testing shows high yield spreads have more predictive power than does the halving schedule for BTC price and direction. Based on that, the run from 15-20k was just catching back up to where BTC should've been based on high yields spreads as the market was overly pessimistic post-FTX. 

Edited by TwoCitiesCapital

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