Bots were responsible for Bitcoin’s stratospheric ascent, anonymous report claims

Posted by on Jun 2, 2014 in Bitcoin, HeadLines | 0 comments

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Coin image adapted from Flickr user Antana

photo: Gigaom Illustration
Summary:The report, posted on Sunday as an analysis of public logs, suggests that the systems of failed bitcoin exchange MtGox played host to automated bots that artificially pushed the bitcoin price skywards during 2013.

An authoritative-looking report has appeared that suggests bitcoin‘s meteoric rise late last year — from $200 to $1,200 in one month — may have at least partly been the work of bots, possibly associated with those running the melted-down MtGox online exchange.

The so-called Willy Report emerged on Sunday, claiming to demonstrate fraudulent activity at MtGox. Is it correct? Hard to tell at this point, though it is based on public logs and it does at least have in its favor an absence of accompanying malware (something that blighted the last bundle of alleged MtGox fraud evidence).

According to the report’s anonymous author, automated bots dubbed Willy and Markus spent much of 2013 repeatedly creating new MtGox accounts and using them to “buy” large amounts of bitcoin without actually spending any real money. In total, the two bots probably bought up a volume that’s “suspiciously close” to the 650,000 bitcoins MtGox CEO Mark Karpeles claims the company lost, the report notes.

The report’s author seems to think MtGox itself was behind this activity, based on discrepancies in leaked logs that suggest a cover-up, among other circumstantial details. Interestingly, “Willy seemed to be immune to network downtime,” suggesting the bot was running from MtGox’s own servers. The author characterizes all this as a Ponzi scheme, based as it is on fake liquidity boosting the bitcoin market.

It’s worth remembering how powerful MtGox was in the bitcoin scene last year, handling as it did the bulk of all bitcoin trades. Whether or not Karpeles was indeed behind this, the Willy Report does present convincing-looking evidence of heavy manipulation of the bitcoin price. That price is now around $580, which the report’s author reckons is its realistic “fair” valuation.

UPDATE (28 May): It seems WordPress has taken down the report’s one-post site for violating its terms of service.

http://gigaom.com/2014/05/26/bots-were-responsible-for-bitcoins-stratospheric-ascent-anonymous-report-claims/

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