And Now We Find Out….

which of the so-called “exchanges” have been acting as true exchanges (that is, not attempting to insert themselves into the transaction for profit-by-arbitrage) and which have been playing bucket shop, “not really delivered” games and similar.
The opportunities for chicanery in a “market” that has a couple of thousand people controlling 95% of the float are ridiculous. When the people who own the “exchanges” are some of those folks the opportunities are not only ridiculous they’re nearly assured to be taking place, especially when there are no cops on the beat.
The government would never allow the people with any material percentage ownership of the stock outstanding to run a stock exchange. Why? Because there is an obvious conflict that cannot be policed or resolved. Yet we have exactly that today with the Winklevoss twins, among others, in the crypto space. This, in any regulated market, would never be permitted and if attempted through concealment would lead to immediate indictments and imprisonment — for just cause. But in a space where no such rules exist, well, why not?
In the crypto space, especially with the recent parabolic moves in price, the incentives for intentional misconduct are just too high. The simple arb games between exchanges and the privileged position of the exchanges in terms of settlement and pricing make a nearly-impossible to resist target for such activity, especially when there’s nothing like the Exchange Act that makes such illegal (never mind that nowhere near all of them are subject to US laws anyway!)

This post was published at Market-Ticker on 2017-12-22.