The price of Bitcoin may have been manipulated by traders seeking to drive the price up with suspicious activity. New research has revealed suspicious activity in the years-old transaction logs of the ill-fated Mt. Gox exchange, which went from handling 70% of all bitcoin transactions to declaring bankruptcy in 2014 after lost over 800,000 bitcoins. It seems that a number of accounts have automatically raised the price with bot-powered trades.
The research, conducted by teams from the University of Tulsa and Tel Aviv University and published in the Journal of Monetary Economics this month, examined transactions on Mt. Gox between February and November 2013. team discovered that a single account named “Markus,” which lacked location data, apparently never paid transaction fees and paid random prices for bitcoins. In total, 335,898 bitcoins worth $76 million was credited to his account in 225 days.
It gets weirder. Another 49 accounts that were also missing important data, lumped together by researchers as “Willy Bot” for their habit of buying exactly $2.5 million in bitcoins before stopping, bought 268,132 bitcoins in 65 days, a stock that was strongly correlated to a price surge that rose from $150 to $1,000 over the same time frame, an increase of almost 700%. “Markus” and “Willy Bot” averaged 21% and 18% of Mt. Gox’s daily activity, respectively, when active.
Eventually, Mt. Gox filed for bankruptcy in Japan in February 2014, after admitting to losing $450 million in bitcoins. It wasn’t until March 2017 that bitcoin’s price finally recovered from the Mt. Gox shock and started reaching its current price of $12,033, fueled by a bigger wave of crypto excitement. -cash.
However, the researchers warn in the paper that the current market is likely to undergo similar changes. With nearly 900 “altcoins” in the market, many of these smaller tokens will have the same low trading levels seen in bitcoin’s past. Similar manipulation could cause the same peaks and drops.