Bloomberg Businessweek: The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market

The following is an excellent article written by Olga Kharif on the Bloomberg Businessweek website on December 8, 2017 titled “The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market” which was published in the December 11, 2017 issue of Bloomberg Businessweek on page 32 titled “Thinking About Bitcoin? Beware the Whales” and I quote:

“The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market”

A few massive investors can rock it with a shrug.
Illustration: Patrik Mollwing for Bloomberg Businessweek

On Nov. 12, someone moved almost 25,000 bitcoins, worth about $159 million at the time, to an online exchange. The news soon rippled through online forums, with bitcoin traders arguing about whether it meant the owner was about to sell the digital currency.

Holders of large amounts of bitcoin are often known as whales. And they’re becoming a worry for investors. They can send prices plummeting by selling even a portion of their holdings. And those sales are more probable now that the cryptocurrency is up nearly twelvefold from the beginning of the year.

About 40 percent of bitcoin is held by perhaps 1,000 users; at current prices, each may want to sell about half of his or her holdings, says Aaron Brown, former managing director and head of financial markets research at AQR Capital Management. (Brown is a contributor to the Bloomberg Prophets online column.) What’s more, the whales can coordinate their moves or preview them to a select few. Many of the large owners have known one another for years and stuck by bitcoin through the early days when it was derided, and they can potentially band together to tank or prop up the market.

“I think there are a few hundred guys,” says Kyle Samani, managing partner at Multicoin Capital. “They all probably can call each other, and they probably have.” One reason to think so: At least some kinds of information sharing are legal, says Gary Ross, a securities lawyer at Ross & Shulga. Because bitcoin is a digital currency and not a security, he says, there’s no prohibition against a trade in which a group agrees to buy enough to push the price up and then cashes out in minutes.

Bitcoin: What’s Coming in the Year Ahead

Regulators have been slow to catch up with cryptocurrency trading, so many of the rules are still murky. If traders not only pushed the price up but also went online to spread rumors, that might count as fraud. Bittrex, a digital currency exchange, recently wrote to its users warning that their accounts could be suspended if they banded together into “pump groups” aimed at manipulating prices. The law might also be different for other digital coins. Depending on the details of how they are structured and how investors expect to make money from them, some may count as currencies, according to the U.S. Securities and Exchange Commission.

Asked about whether large holders could move in concert, Roger Ver, a well-known early bitcoin investor, said in an email: “I suspect that is likely true, and people should be able to do whatever they want with their own money. I’ve personally never had time for things like that though.”

“As in any asset class, large individual holders and large institutional holders can and do collude to manipulate price,” Ari Paul, co-founder of BlockTower Capital and a former portfolio manager of the University of Chicago endowment, wrote in an electronic message. “In cryptocurrency, such manipulation is extreme because of the youth of these markets and the speculative nature of the assets.”

The recent rise in its price is difficult to explain because bitcoin has no intrinsic value. Launched in 2009 with a white paper written under a pseudonym, it’s a form of digital payment maintained by an independent network of computers on the internet‚ using cryptography to verify transactions. Its most fervent believers say it could displace banks and even traditional money, but it’s only worth what someone will trade for it, making it prey to big shifts in sentiment.

Like most hedge fund managers specializing in cryptocurrencies, Samani constantly tracks trading activity of addresses known to belong to the biggest investors in the coins he holds. (Although bitcoin transactions are designed to be anonymous, each one is associated with a coded address that can be seen by anyone.) When he sees activity, Samani immediately calls the likely sellers and can often get information on motivations behind their sales and their trading plans, he says. Some funds end up buying one another’s holdings directly, without going into the open market, to avoid affecting the currency’s price. “Investors are generally more forthcoming with other investors,” Samani says. “We all kind of know who one another are, and we all help each other out and share notes. We all just want to make money.” Ross says gathering intelligence is legal.

Ordinary investors, of course, don’t have the cachet required to get a multimillionaire to take their call. While they can track addresses with large holdings online and start heated discussions of market moves on Reddit forums, they’re ultimately in the dark on the whales’ plans and motives. “There’s no transparency to speak of in this market,” says Martin Mushkin, a lawyer who focuses on bitcoin. “In the securities business, everything that’s material has to be disclosed. In the virtual currency world, it’s very difficult to figure out what’s going on.”

Ordinary investors are at an even greater disadvantage in smaller digital currencies and tokens. Among the coins people invest in, bitcoin has the least concentrated ownership, says Spencer Bogart, managing director and head of research at Blockchain Capital. The top 100 bitcoin addresses control 17.3 percent of all the issued currency, according to Alex Sunnarborg, co-founder of crypto hedge fund Tetras Capital. With ether, a rival to bitcoin, the top 100 addresses control 40 percent of the supply, and with coins such as Gnosis, Qtum, and Storj, top holders control more than 90 percent. Many large owners are part of the teams running these projects.

Some argue this is no different than what happens in more established markets. “A good comparison is to early stage equity,” BlockTower’s Paul wrote. “Similar to those equity deals, often the founders and a handful of investors will own the majority of the asset.” Other investors say the whales won’t dump their holdings, because they have faith in the long-term potential of the coins. “I believe that it’s common sense that these whales that own so much bitcoin and bitcoin cash, they don’t want to destroy either one,” says Sebastian Kinsman, who lives in Prague and trades coins. But as prices go through the roof, that calculation might change.

BOTTOM LINE – It’s not necessarily illegal for big holders of some cryptocurrencies to discuss trading with one another. That puts small buyers at a disadvantage.”
(WHILE THE CON ARTISTS ARE OUT PROMOTING WORTHLESS BITCOINS AND TOXIC DERIVATIVES, THE SMART BUYERS ARE STILL BUYING GOLD AND SILVER AND A LOT OF THEM ARE BUYING FOOD COMMODITIES ON THE CHICAGO MERCANTILE EXCHANGE.  ALL OF THESE COMMODITIES HAVE A REAL ASSET VALUE.  YOU CERTAINLY CANNOT EAT TOXIC DERIVATIVES OR BITCOINS THAT HAVEN’T PROVEN ANYTHING OTHER THAN WHEN THE STOCK MARKET TAKES A CRASH, YOU WILL SEE WHICH ONE GOES DOWN FIRST.
LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen Member and USAF Veteran
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Bloomberg Businessweek: Mueller’s Investigation Just Got Some Insurance

The following is an excellent article written by Greg Farrell, Tom Schoenberg and Neil Weinberg on the Bloomberg Businessweek website on December 7, 2017 titled “Mueller’s Investigation Just Got Some Insurance” which was published in the December 11, 2017 issue of Bloomberg Businessweek on page 44 titled “Mueller Was Here” and I quote:

“Mueller’s Investigation Just Got Some Insurance”

The Flynn plea makes it difficult for Trump to can the special counsel without inviting charges of a cover-up and sparking a constitutional crisis.

The Dec. 1 plea deal struck with President Trump’s former national security adviser, Michael Flynn, marked a big step forward in Robert Mueller’s Russia investigation. It may also have provided some protection for Mueller against being fired by the president—and helped ensure that his probe will continue, even if one day he’s not leading it.

Flynn pleaded guilty to one count of lying to federal agents about his communications with the Russian ambassador last December. Given the other potential crimes that Flynn may have committed, including his failure to disclose that he was being paid millions of dollars by a Turkish company while serving as a top official in the White House, the relatively light charge signaled to many that Flynn had something significant worth sharing.

As Mueller’s probe has gotten closer to Trump’s inner orbit, speculation has risen over whether Trump might find a way to shut it down. The Flynn deal may make that harder. For one thing, it shows that Mueller is making progress. “Any rational prosecutor would realize that in this political environment, laying down a few markers would be a good way of fending off criticism that the prosecutors are burning through money and not accomplishing anything,” says Samuel Buell, a former federal prosecutor now at Duke Law School.

The Flynn plea also makes it difficult for Trump to fire Mueller without inviting accusations of a cover-up and sparking a constitutional crisis, says Michael Weinstein, a former Department of Justice prosecutor now at the law firm Cole Schotz. “There would be a groundswell, it would look so objectionable, like the Saturday Night Massacre with Nixon,” Weinstein says, referring to President Richard Nixon’s attempt to derail the Watergate investigation in 1973 by firing special prosecutor Archibald Cox.

Photo Illustration by 731; Photos: Getty Images (2)

Even if Mueller goes, his team is providing tools that other prosecutors or investigators can use to continue inquiries. Flynn’s deal requires him to cooperate with state and local officials as well as with federal investigators. That includes submitting to a polygraph test and taking part in “covert law enforcement activities.” Mueller also has provided a road map to state prosecutors interested in pursuing money laundering charges against Trump’s former campaign chairman, Paul Manafort.

Mueller’s case against Manafort lays out a series of irregular wire transfers made from Manafort’s bank accounts in Cyprus to a variety of companies in the U.S. The sums that Manafort transferred suggest the possibility that some of the money was diverted for other purposes. Mueller stopped short of filing charges related to where the money went. But by including the details in his indictment, he left open the possibility of bringing charges in a follow-up indictment and perhaps left breadcrumbs for state authorities to pursue.

The president can pardon people convicted of federal crimes; only governors can pardon those convicted under state law. For prosecutors in New York, “the Manafort case is like a legal Chia Pet,” says Weinstein. “Just add water, and it grows.” Manhattan District Attorney Cyrus Vance Jr. is investigating the circumstances surrounding unusual real estate loans to Manafort from a bank run by Steve Calk, who served as an adviser to the Trump campaign. New York Attorney General Eric Schneiderman is conducting his own Trump-related probe.

Trump’s reaction to Flynn’s plea raised fresh questions about whether the president had obstructed justice. The day after Flynn appeared in court, Trump tweeted that he fired Flynn because he’d lied to the FBI, which some lawyers say provided a new piece of evidence of what the president knew and when he knew it. Legal experts say Mueller’s ability to bring an obstruction case against Trump could hinge on whether the president was aware of Flynn’s illegal activities when he fired FBI Director James Comey. Prosecuting an obstruction case without an underlying crime is problematic. Critics could demand to know what crime Trump or his campaign officials committed to justify the charge. Many have already argued that collusion itself isn’t a crime. And within days of the Flynn agreement, Trump’s personal lawyer, John Dowd, began pushing back against the notion that a sitting president can even be charged with obstruction.

Mueller is also looking at conduct before the election, when Trump was a private citizen and not covered by the executive protections afforded by the Oval Office. If Mueller uncovers evidence that the campaign accepted Russian help, that opens up the possibility of charging people in the Trump campaign with conspiracy related to the solicitation of in-kind foreign donations. Mueller’s team would be on stronger ground if it uncovered evidence of any quid pro quo deals struck during the campaign, either in changes to the GOP platform favoring Russia or promises made to entice Moscow’s help against Hillary Clinton.

Flynn alone may not be enough to advance an obstruction or collusion case. Prosecutors would likely need evidence against other high-ranking Trump associates, including perhaps Jared Kushner. “Unless you’ve got them on tape, you’re going to need a lot better witnesses than Flynn,” says Raymond Banoun, a former federal prosecutor.

Some experts believe that Mueller’s probe is now almost certain to reach a step beyond that. “Before this is wrapped up, Mueller’s going to request an interview with the president, and he may even request it under oath,” says Amy Sabrin, a Washington lawyer who worked for Bill Clinton on the Paula Jones sexual harassment case. “And then what is Trump going to do?”

BOTTOM LINE – Flynn’s plea deal marks a big step forward for Mueller’s Russia probe and also helps him ensure it continues should Trump fire him.”
(REPUBLICAN PRESIDENT RICHARD NIXON HOLLERED ABOUT THE SPECIAL PROSECUTOR NOT BEING FAIR BUT HE GOT PROSECUTED AND HAD TO RESIGN AND JUSTICE WAS DONE.   DEMOCRATIC PRESIDENT BILL CLINTON WAS IMPEACHED AND WAS ACQUITTED AND JUST ICE WAS ALSO SERVED.   NOW, WE HAVE A MUCH BIGGER PROBLEM THAN BOTH AND IF WE ARE GOING TO KEEP OUR U.S. CONSTITUTION, THIS ALSO MUST BE PROSECUTED IN OPEN COURT AND UNDER OATH.

LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen Member and USAF Veteran

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Raw Story: Stephanie Ruhle Explains Why Booting Franken Could Lead to Trump’s Impeachment

The following is an excellent article written by Travis Gettys on the Raw Story website on December 7, 2017 titled “Stephanie Ruhle Explains Why Booting Franken Could Lead to Trump’s Impeachment” and I quote:

“Stephanie Ruhle explains why booting Franken could lead to Trump’s impeachment”

MSNBC’s Stephanie Ruhle hilariously found herself agreeing with Fox News host Laura Ingraham, who speculated Democrats are booting Sen. Al Franken (D-MN) over sexual harassment claims to hurt President Donald Trump.

Democratic women senators called on Franken to resign over the allegations against him, and Ruhle agreed with a guest that this was an instance where the morally right thing to do was also good politics.

“We can talk all day long about how unpopular President Trump is, he is a political svengali,” Ruhle said. “An unpopular, completely unqualified, morally reprehensible person became president of the United States. I cannot believe — lightning’s going to strike me, I’m saying this — I want to share what Laura Ingraham had to say.”

The Fox News host claimed Democrats had “come down with a sudden case of feverish morality,” and she insisted the calls for Franken to step down were nothing but a “political calculation.”

“It sets the precedent for the Democrats to try to drive Roy Moore from office should he win the Alabama Senate (seat), and, two, this is the next step in the quest to impeach President Trump,” Ingraham said on her own program.

Mike Pesca, host of “The Gist” podcast for Slate, said Franken’s resignation was both morally right and politically helpful as sexual harassers and abusers are driven out of politics and the media.

“Look, there’s going to be a party that countenances with sexual harassment and there’s going to be a party that doesn’t,” Pesca said. “If we have to sacrifice Franken to brand ourselves the party that doesn’t, that’s what we want to do.”

Moore has been accused by several women of molestation and predatory behavior against them as teenage girls, and Trump has been accused by at least 16 women of sexual assault — which he infamously boasted about on the “Access Hollywood” tape.

“I feel like lightning is going to strike me,” Ruhle said. “Does Laura Ingraham have a point here? Democrats are going — Al Franken could be the sacrificial lamb and say, look at the moral high ground we found.”

She said that could give Republicans an opening to turn the discussion back to Bill Clinton’s sexual misconduct, but she and her guests agreed there were too many current examples of GOP wrongdoers to ignore.

“Is this not the year of the ultimate age of hypocrisy?” Ruhle said. “For Lisa Murkowski, a Republican, to come out and call for Al Franken to resign, does Lisa Murkowski not remember that her, our president of the United States, Donald Trump, who she stands behind, has more accusers than Al Franken and have accused him of worse. How does Lisa Murkowski stand up and say I think Al Franken need to step down and stand silent when it comes to our president, our Republican president?””

(SENATOR AL FRANKEN CHARGES WERE A LOT, LOT LESS SERIOUS THAN REPUBLICAN PRESIDENT DONALD TRUMP’S WERE, PARTICULARLY SINCE IT INVOLVED MORE PEOPLE AND INVOLVING TEENAGERS,AS WELL AS THE FACT THAT ONE OF THE WOMEN WAS SUING DONALD TRUMP.  HOPEFULLY, HE’S GOING TO BE CALLED UP TO TESTIFY JUST LIKE FORMER PRESIDENT BILL CLINTON HAD TO DO.   I HOPE THE VOTERS IN ALABAMA VOTE FOR THE DEMOCRAT, DOUG JONES, SO THEY CAN CALL THEMSELVES A CHRISTIAN STATE WITH A STRAIGHT FACE.

LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen Member and USAF Veteran

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