
Dogecoin market manipulation? - NotUncivil
http://pastebin.com/tZYvK7UD
======
socillion
I'm not sure why it's on HN, but it's real.

It was originally happening in the public channel #dogecoin-market on Freenode
but was then moved to the private channel #marketmakers, which seems to have
spurred people to start sharing it everywhere since now it's private.

Wolong is the guy who brought the Dogecoin price to where it is now by
investing a ton of money into it, and due to that and some charisma he's
attracted a cult following. He's now using that cult following to have them do
pump/dump ops for him (with their money).

Here's his manifesto:
[http://pastebin.com/RdRAULtT](http://pastebin.com/RdRAULtT)

It's entertaining, I'm waiting for someone to do a solid article on the story.

Bear in mind that cryptocurrencies are currently an unregulated wild west,
where activities like these are both common and legal. Do not invest anything
you are not prepared to lose.

edit: just for further corroboration, here's logs from a few days ago:
[http://pastebin.com/1NTTBCXM](http://pastebin.com/1NTTBCXM)

You can check the charts at
[http://bitcoinwisdom.com/markets/cryptsy/dogebtc](http://bitcoinwisdom.com/markets/cryptsy/dogebtc)
and see how that was responsible for a drop to 212. From memory they were
using about 36million dogecoins, which comes out to approximately 78btc or
$65,000.

My pet theory is that wolong is just building trust at this point so he can
eventually have his army of followers buy all his dogecoins at inflated
prices, but who knows. No matter what happens, it's very entertaining to watch
develop.

~~~
jeremyjh
Why are you sure this is legal (everywhere)? No it isn't regulated by the SEC,
but that does not mean that it isn't fraud.

~~~
socillion
Right now the prevailing attitude is that it's legal and nobody will get
prosecuted for it. It's certainly possible for this to change, but premined
altcoins (creators mine a % before making it public) and other alleged scams
such as Quarkcoin (Max Keiser & Bill Still) have happened repeatedly.

My statement was from the angle that if you get ripped off in a situation like
this, there is no recourse for you, and not legal advice that you cannot get
in trouble for participating in these activities.

~~~
DennisP
I wouldn't expect premines to legally qualify as fraud, since by their nature
they can't be done in secret. If someone releases a coin and you see it
already has a long blockchain, you know it's premined and can make your
investment decision accordingly.

~~~
socillion
You're right, that was a poor example.

------
SwellJoe
The amusing/sad thing is that so many folks don't realize that only a few of
the "market movers" actually profit. Those who don't have the inside inside
track, will lose when those who make the call to buy and sell. The whole "we
move the market" thing is accurate...but, the suckers who think they're part
of moving the market are just the people giving money to "-wolong-". I have a
hard time feeling sorry for people losing money in such a scheme, because they
intended to take money from others...but, still, the biggest asshole in this
scenario is the leader of the pump.

~~~
mjburgess
I guess it's like a pyramid scheme where everyone knows its a pyramid scheme
and believes theyre close enough to the top that they'll still profit.

------
Alex3917
Meh. The only reason the price is as low as it is currently is that A)
$850,000 needs to be added to the market every single day just to keep the
price stable B) Coinbase et al. literally can't convert dollars to BTC fast
enough. The situation is similar to how whenever Apple releases a new iPhone,
it takes literally months until there is enough supply to match the demand.

While this market manipulation is blatantly unethical and possibly illegal, in
the long run it's going to be larger economic factors that determine the
success or failure of the currency.

~~~
rtpg
can you explain why almost a million dollars needs to be injected into the
market to keep the price stable?

~~~
tlrobinson
That's the value of the Dogecoins being mined every day:

Blocks per day: 60 * 24 = 1440
([https://bitcointalk.org/index.php?topic=361813.0](https://bitcointalk.org/index.php?topic=361813.0))

Current block reward: ~500,000 doge
([https://bitcointalk.org/index.php?topic=361813.0](https://bitcointalk.org/index.php?topic=361813.0))

Total block rewards per day: 1440 * 500,000 = 720,000,000 doge

Current exchange rate: 1 doge = US$0.0017
([http://dogecoin.com/](http://dogecoin.com/))

Total block rewards in USD per day: 720,000,000 * 0.0017 = $1,224,000

~~~
hueving
That would make sense if every miner immediately sold every coin he/she mined.

~~~
tlrobinson
Miners have to pay for electricity and hardware. I doubt they're doing that
with Dogecoins.

~~~
ycui1986
Doge had been the most profitable altcoin to mine several times in the past
couple months.

~~~
sireat
You will be hard pressed to find any serious miner who is keeping mined Doge
instead of converting them to BTC or fiat. Serious mining farms pay for their
electricity, thus they will not have amortized their GPUs solely from Doge.

Sure, if you are a gamer with "pre-paid" graphics card AND "free" electricity,
you may elect to keep your mined Doge.

------
vijayboyapati
This illustrates a simple idea in economics: cartels are hard to maintain
because participants will look out for their own self-interest.

~~~
HarryHirsch
I don't know the literature, and what assumptions they make in there, but out
in the real world the lightbulb cartel lasted from 1924 till 1942 or
thereabouts. The keyword to look for is "Phoebus Cartel". Also, recently in
the news: the Silicon Valley wage-fixing cartel.

They may be hard to maintain, but they do spring up and may exert power while
alive.

~~~
ama729
Phoebus was indeed established in 1924 but:

1) There is a scientific basis for the 10.000 hours, the "greatest"
achievement generally attributed to Phoebus[1]:

    
    
        > For a supply voltage V near the rated voltage of the lamp:
        
            Light output is approximately proportional to V 3.4
            Power consumption is approximately proportional to V 1.6
            Lifetime is approximately proportional to V −16
            Color temperature is approximately proportional to V 0.42[88]
    

2) According wikipedia (and this page: [http://www.uwcc.wisc.edu/icic/def-
hist/history/famous.html](http://www.uwcc.wisc.edu/icic/def-
hist/history/famous.html) )[2]:

    
    
        > In the late 1920s a Swedish-Danish-Norwegian union of companies
        (the North European Luma Co-op Society) began planning an independent
        manufacturing centre. Economic and legal threats by Phoebus did not
        achieve the desired effect, and in 1931 the Scandinavians produced and
        sold lamps at a considerably lower price than Phoebus.
    

[1]
[http://en.wikipedia.org/wiki/Lightbulb#Light_output_and_life...](http://en.wikipedia.org/wiki/Lightbulb#Light_output_and_lifetime)

[2]
[http://en.wikipedia.org/wiki/Phoebus_cartel#Demise](http://en.wikipedia.org/wiki/Phoebus_cartel#Demise)

------
NotUncivil
Archived 4chan thread where the leak happened:
[http://rbt.asia/g/thread/S39865892](http://rbt.asia/g/thread/S39865892).

\-- Edit --

More logs got leaked at
[http://pastebin.com/7itGzitH](http://pastebin.com/7itGzitH). I have not read
them yet, so cannot tell you if there is anything of value in there.

------
Geee
It's interesting that this could all be 'fake'. You don't actually need
'followers' to do this. If you lead the public to think that there's a massive
pump/dump going on, you can make the public follow your orders. Obviously you
need to discuss on public forums, or 'leak by accident'.

------
carrja99
I feel sorry for the people participating in this market manipulation. I made
a good chunk of BTC thanks to wolong's forewarning of his upcoming pump he
made days ago but left it at that.

The character started insisting 10k doge tips for him to answer questions on
irc, then moved to a private channel where to get an invite you basically have
to prove you at least have 10 BTC and are willing to let him ultimately
execute trades on your behalf. There are lots of fools in that channel who
will soon find themselves parted with their money.

------
jonknee
It would be shocking if there was not manipulation in a completely unregulated
market. We can't stop manipulation in regulated markets, without any rules
it's the wild west.

~~~
javert
I think this is precisely the right conclusion to draw, plus the fact that the
manipulation is harmless unless you intentionally expose yourself to the risk.

------
FireBeyond
“I feel so awful for those who lost here.”

Nothing sweeter than the tears of someone who lost money truing to manipulate
other people into losing money ...

~~~
TomiHiltunen
True that!

------
KVFinn
Anyone have a link to a tl;dr on how market manipulation like this works? It
seems like crypto-currencies are ripe for for this of thing and it doesn't
take much money to do it.

Presumably the hidden information you have from being part of a cabal means
it's different than just changing your risk distribution like a Martingale
betting strategy does.

~~~
socillion
The way it works is to use a giant bid or ask wall to push the price around.
Say the asset has bids at 220 and asks at 222, and you want to push the price
downwards. You put up an ask of an amount equivalent to maybe 6hours volume at
224 (an "ask wall"). Anyone selling will put their orders below that wall, and
as you slowly move the wall downwards people will sell into the market in the
expectation that they can buy again once you've pushed the price lower than
where they sold.

This relies on the large wall not being an attractive offer for someone who
has the purchasing power to obliterate it, which is where it occasionally
fails. Generally, if the market starts to move against it with any force, it's
pulled or moved further back behind other orders.

Another way this can be used is by putting up a wall on the opposite side of
your real order to drive demand - i.e. in the scenario above, you might be
trying to buy at 220. If you put up a huge wall at 224, people will be more
willing to fill your order at 220 than if the orderbook was much thinner.

It seems this is called spoofing in the financial world.

~~~
HNaTTY
That was a good explanation, except for the fact that I think you're referring
to eg 220, 222, and 224 as the Satoshi/DOGE exchange rate, and by pushing the
price downwards, you'll actually get more Satoshi for each DOGE.

Pushing the price "down" to 224 from 220 is very confusing and caused me to
have to read your post several times to make sure I understood correctly.

~~~
socillion
I mean that putting a large sell order at 224 would make the buys (at the
moment, at 220) move lower as the orders are filled by other people selling to
them. You could then move the wall downwards, say to 221, when the sells in
the orderbook had also moved downwards from 222. At this point the market's
state would be something like buys at 218, sells at 220, and your wall at 221,
effectively having pushed the market downwards from where you started.

I hope this made what I meant a bit clearer.

------
drawkbox
Game theory in action. There will always be manipulation in every market, even
in doge. Early hedge fund managers here.

~~~
thom
Even ignoring the macro effects, just reading the log and watching people bail
out early, it occurred to me that this would be a great case study for
students of game theory.

------
sarreph
I love the irony of the term _selfish_ that keeps getting thrown around by
these hypocrites.

------
pmorici
To bad there isn't this kind of transparency in the real supposedly regulated
markets. There is manipulation there all the time only we never hear about it
because it isn't being done by some guy in a public IRC channel.

------
icedchai
All cryptocurrencies are being manipulated. You would be naive to believe
otherwise.

(and Dogecoin is for lulz anyway!)

------
runn1ng
What the hell am I reading

~~~
chippy
...and is it worth investing my time trying to understand this?

------
nlp
So dishonesty. Wow.

~~~
TomiHiltunen
Such _

------
gigq
I'm not sure if people think crypto currency market manipulation is new but
this was going on far before Dogecoin came out.

[http://dealbook.nytimes.com/2013/12/05/in-the-murky-world-
of...](http://dealbook.nytimes.com/2013/12/05/in-the-murky-world-of-bitcoin-
fraud-is-quicker-than-the-law/)

[https://twitter.com/Fontase](https://twitter.com/Fontase)

------
Oculus
Is the main idea behind this scheme to get other participants to lower the
price and since the orchestrators got their positions earlier they profit or
do they simply need the volume of the masses to make their scheme profitable?
If it's the latter, couldn't they just get a large enough loan and move the
markets with their own funds seeing as Dogecoin is still a relatively small
market?

------
msantos
I guess this Wolong person is taking the scam serious..

> Wolong To Launch A Forum

> The plan is to make the forum private and tight-knit; thereby locking out
> trolls. According to him, the entrance fee will be between $25-$30 USD

[http://www.dailydoge.org/2014/01/wolong-to-launch-a-
forum/](http://www.dailydoge.org/2014/01/wolong-to-launch-a-forum/)

------
dylanhassinger
looks like standard troll box blather to me

------
bredren
Pumping is going on in every crypto currency right now. If it isn't as
straightforward as a chat log, it is being done more subtly in other ways.
Alt-currencies, (i.e. not bitcoin) seem to have more pump and dump going on.

------
fleitz
The market is about buying low and selling high, or selling high and buying
low.

If you trade with out an edge you're a moron. I really hope no one trades
actual markets believing they can 'pick' equities.

~~~
Mikeb85
> I really hope no one trades actual markets believing they can 'pick'
> equities.

I do and make a lot of money doing it. It's not about picking equities per se,
it's about finding good trading opportunities - every equity provides good and
bad trades, depending on a multitude of factors. You can play any stock both
long and short....

~~~
scotty79
What you do, is living in tornado zone and counting each day without tornado
as a win attributed to our skill on picking and swapping houses in the zone.

~~~
Mikeb85
A think a more apt analogy would be comparing it to something like poker. Yes
it's risky, but if you know how to navigate markets, it's a controlled risk,
in which you can come out ahead more often than not...

~~~
scotty79
All risk is controlled until it's not.

In my country to ride the bus you buy tickets in the shop. Once you get into
the bus you invalidate the ticket by printing date and hour on the ticket with
the device installed there.

Once in a while (once in few weeks or months depending on your luck and how
much you ride) the guy shows up on your ride who checks if everyone has
properly invalidated tickets. If you don't have one, you'll get a fine.

If you wish you may never buy the tickets and just pay fines when they happen.
Every time you ride without the ticket you earn but you take the risk of the
fine. You might argue that it's contolled risk since you estimated how often
fine happens on average. But everything is awesome until one time you
encounter streak of fines that eat up all your previous earnings and some
future ones too.

It's the same game that those banks that invested in derivatives were playing.

------
sputnikus
It's fun to hear many people saying: "Jamaican bobsleigh donations raised
Dogecoin prices", while it's just series of small speculative attacks on
cryptocurrency happening.

------
keeran
Market manipulation happens everywhere, why is this special?

------
plantain
It seems quite likely the dogecoin reddit moderators are involved with this
due to absolute radio silence about market manipulation on the subreddit.

~~~
empraptor
I was curious so searched for manipulation on the dogecoin subreddit. Got the
following as first hit. I don't know enough about reddit algo to speculate why
it doesn't show up on front page of the subreddit.

[http://www.reddit.com/r/dogecoin/comments/1w7otj/dogecoin_ma...](http://www.reddit.com/r/dogecoin/comments/1w7otj/dogecoin_market_manipulation_leaked_irc_logs/)

------
kudu
I reported this to a freenode staffer. He said they didn't appreciate this
kind of activity much and that they would investigate it.

------
kolev
Gee, I totally get somebody putting money into Bitcoin or mining Litecoin, but
the rest are honest scamcoins (or at least - circuscoins). If you mine, then
it's probably okay, although it still costs you real money (energy, hardware,
opportunity cost, etc.), but to put money (fiat or bitcoins) into it - you
need to be completely out of your mind!

~~~
Marazan
What makes Bitcoin and Litecoin not scam coins?

~~~
wmf
There's an argument that the world needs one cryptocurrency but not two.
Therefore the first one (Bitcoin) is not a scam, but all others are.

~~~
GFischer
Your second point doesn't necessarily derive from the first.

I can understand standardizing on only one cryptocurrency, but why not one
that addresses many of Bitcoins' limitations?

I'm not saying it should be Dogecoin, actually I hope not, but it could be.

~~~
wmf
I agree that the one cryptocurrency doesn't have to be Bitcoin. What I left
unsaid is that so far none of the altcoins provide enough improvement over
Bitcoin that it's worth breaking compatibility.

------
felipelalli
"Bitcoin é foda, o resto é moda." a rhyme in Portuguese which means "Bitcoin
is awesome, the rest is fashion."

~~~
GFischer
Well, "foda" means something else entirely in Portuguese, tough I can't claim
to understand the meaning of the quote :) .

[http://www.urbandictionary.com/define.php?term=foda](http://www.urbandictionary.com/define.php?term=foda)

------
tomphoolery
Who the fuck cares? It's fucking dogecoin. It's the "slot machine" of
cryptocurrencies.

~~~
kordless
Penny slots at that.

~~~
fleitz
Slots have the highest rake, and penny slots the highest rake of the slots.

The term fish in a barrel comes to mind.

------
thechut
This is the exact same thing that happened in bitcoin markets early on.

When the capitalization of the market is so low and a small number of people
control a large amount of the currency/commodity there really isn't much you
can do about it.

------
easy_rider
This seems to be the channel in question [1].

[1]
[http://irc.netsplit.de/channels/details.php?net=freenode&roo...](http://irc.netsplit.de/channels/details.php?net=freenode&room=%23dogecoin-
market)

~~~
tomasquintero
it's not #dogecoin-market, that's the public channel that they push positive
messages to. They run their schemes in #marketmakers, an invite-only channel
on freenode.

------
Zikes
I've always thought of dogecoin as the "CJ" of cryptocurrencies, and I'm still
not entirely sure I'm mistaken about that.

In that context, this is a much tamer "conspiracy" than I expected.

~~~
evan_
"always"? So for the last month and a half?

~~~
Zikes
Nearing two months, yes.

------
gattler
Click: [http://www.reddit.com/r/shibedojo](http://www.reddit.com/r/shibedojo)
(<\- We trade Doge the pro way)

------
FredericJ
Related must-watch:
[http://www.youtube.com/watch?v=4kuM_NTTxAc](http://www.youtube.com/watch?v=4kuM_NTTxAc)

------
TomiHiltunen
Funny how these crypto currency people bash on the Wallstreet but then pull of
the same stunts with official unmonitored currencies.

~~~
parksy
Who is to say it isn't Wall Street traders pulling these stunts?

------
driverdan
There are a number of pump and dumpers manipulating the altcoin market. I'm
surprised there aren't more people doing it.

------
elwell
Or fake anti-dogecoin propaganda. ... I can't believe we're even still talking
about dogecoin, this is insane.

------
retrogradeorbit
-wolong- is probably on the other side of the trades buying up cheap. Herding a flock of sheep to shear.

------
bakhy
another free market triumph ;)

------
ck2
It will be back at 200 in the morning, they did buyers a favorite to discount
it before it halves in 15 days.

------
listofranco
Wow so it's wolf of wall st online err-Wolf of Reddit?

