Mt Gox Trading Bots Manipulated the Bitcoin Price

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Magic the Gathering Trading Exchange. Better known as Mt. Gox, once, the world’s largest and most known bitcoin exchange. MtGox was primary an online card trading platform. A few years back it got taken over by Mark Karpeles and its platform got turned into a bitcoin trading platform.

As bitcoin grew in 2012, and most notably in 2013, MtGox’s renown and fortune (seemingly) grew with it. However, as their success grew, so did their troubles.

With partnership failures, the Federal government making USD seizures, large amounts of constant hack attempts, MtGox had its share of problems leading up to the eventual loss of half a billion USD through systemic hacks leading to the closure of its doors in early 2014.

WizSec, a Bitcoin Security Specialists business, have been investigating the MtGox incident from soon after it occurred. They recently brought out an update on their investigation, revealing what they feel safe to open up to the public without compromising the current investigation.

Most media sources report the ‘high’ of $1,100+, little realizing that it was very likely a manipulated value created by the Willy bot (automated trading program). The truth of the matter is that the true value of bitcoin was never that high in late 2013 to early 2014.

willy_market_presence
Image sourced from WizSec

The Willy Report involves investigation into parts of MtGox’s database that was leaked in early 2014. It describes automated trading accounts (bots), which consecutively bought bitcoin at regular intervals.

It is a very interesting read, and it should be a requirement to study for all journalists who assume to use the “Bitcoin high of $1,100” as a comparison to the value today. It will give them a much better understanding of the true contemporary value.

If you relate the average value pre-Willy activity, with the average today, and compared to the last month. You should get a clearer idea of what the true market value should be.

The investigations into Mt. Gox is still ongoing, as is any legal proceedings. Most entities have signed NDA’s (non-disclosure agreements) for the purpose of, not jeopardizing any investigations.

It could be construed from WizSec’s latest update that market manipulation was occurring on the Mt. Gox platform; the identity of the account (willy) owner remains unconfirmed. And especially, where the allegedly bought bitcoins have gone.

Summary of the Willy Report

“The suspicious user accounts identified by the Willy Report all followed a particular pattern:

• Each account was active for a single time period, and only one account was active at a time.
• Each account bought 10-20 bitcoins every 5-10 minutes.
• Each account only bought bitcoin with USD, and never sold any coins.
• Each account bought bitcoin up to a very specific total USD amount (e.g. 2,500,000 USD).
• After each account was “finished”, another account would shortly become active and continue buying.
• These accounts were seemingly able to trade even when MtGox was inaccessible to the world.
• All trades by these accounts had unusual data in the trade log files.”

So every time you hear of the ‘All Time High’ of $1,100+, remember the Willy report.

You can read the WizSec update in full here.

Disclaimer: This article is not meant as market advice, trade bitcoin with careful research and with only what you can spare. CCN Price Analysis, or notably, XBT Social is recommended for trading tips.

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Joel loves Bitcoin and Digital Currency. He holds a BSc (hons) in Criminology with Criminal Justice Studies and Sociology, contributes for Bitcoin Magazine, is an Ambassador for Coloured Coins, Software tester and Advises for GreenCoinX and MultiSigX, and is Director of IBWT ("In Bitcoin We Trust"), a Digital Currency Exchange.