Bitcoin Price Manipulation in Mt. Gox

When we think MT. Gox is buried in the past, it comes back haunting us.  At least we can always learn from it’s debacle.

In this paper researchers from Tela Aviv University and University of Tulsa conclude that the suspicious trading activity caused the unprecedented spike in the USD-BTC exchange rate in late 2013.

Detailed evidence described in Price Manipulation in the Bitcoin Ecosystem – by Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman.

“Abstract: We identify and analyze the impact of suspicious trading activity (STA) on the Mt. Gox Bitcoin currency exchange between February and November 2013. We discuss two distinct STA periods in which approximately 600,000 bitcoins (BTC) valued at $188 million were acquired by agents who did not pay for the bitcoins. During the second period, the USD-BTC exchange rate rose by an average of $20 at Mt. Gox on days when suspicious trades took place, compared to a slight decline on days without suspicious activity. Based on rigorous analysis with extensive robustness checks, we conclude that the suspicious trading activity caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months.:”

good data and methodology.  Check full paper