Mar. 23, 2019
Dear Sir/Madam, I read with interest the 226-page presentation by Bitwise to yourselves accusing the majority of volume on other exchanges (bar the ones that are vital for an ETF) are essentially manipulated or fake (on 03/20/2019). It is also interesting that the day before (03/19/2019) a cryptocurrency magazine published that news warning us that "87 Percent of Cryptocurrency Exchange Volume Is Potentially Suspicious" [https://cointelegraph.com/news/new-report-warns-87-percent-of-cryptocurrency-exchange-volume-is-potentially-suspicious] Furthermore, what is evermore suspicious is that yesterday (03/22/2019) that very same cryptocurrency magazine published the same news warning us that "Bitwise Tells US SEC That 95% of Volume on Unregulated Crypto Exchanges Is Suspect" [https://cointelegraph.com/news/bitwise-tells-us-sec-that-95-of-volume-on-unregulated-crypto-exchanges-is-suspect] Another online magazine said the same thing and added something interesting from the presentation: “The pattern you see fits natural human behavior: People are more likely to trade small amounts of bitcoin than large amounts of bitcoin, and more likely to trade whole bitcoin than fractions of bitcoin (i.e., they are more likely to trade 2.0 bitcoin than 1.9 bitcoin or 2.1 bitcoin).” [https://www.coindesk.com/bitcoin-futures-volume-is-more-significant-than-you-think-bitwise-says]. The above statement is partly false because if you look at any of the order books on the 10 Major exchanges they have quoted as reporting normal volumes and non-suspicious activity, you will note that people preciously trade in ‘fractions’ rather than in whole numbers. For example, right now 10.35am (CET) on Kraken people are selling 2.182, 0.988 BTC for $3977.80 and $3977.90 respectively and buying 0.124 and 1.615 BTC for $3976.80 and £3976.20. Buying whole amounts of BTC is the exception rather than the rule. I can also see orders of 15 to 33 BTC which is quite a significant amount. These patterns are observed on all 10 of the major exchanges which are supposed to be squeaky clean. This series of publications cannot be said to be a coincidence within such online media (usually paid) as it is in the interest of these organisations to prime (manipulate) the public either for image enhancement, poach customers or drive sales through Fear of Missing Out (FOMO) with the hope that you will grant the ETF with the deadline soon approaching. The fact that this presentation has been made to you is indicative of the desperation for an ETF which should make yourselves and the public question why? I have also got many issues with the data that has been presented because: a) a single organisation has been used to conduct this study, b) It is unclear what methodology is used and where the data is acquired from, and c) Traffic data is only collected from a single source, which lacks comprehensiveness and justification. Therefore, in a nutshell, the report can be said to be inaccurate, misleading, and unfair. Furthermore, it is entirely plausible that a group of bad actors within this sector with the use of trading bots have manipulated the data on the other exchanges to secure an ETF. If this presentation is the basis and 'credibility' to grant an ETF, then before granting one can what is required to start with are: The revelation of the methodology and where the data was acquired for this study Independent verification/study (preferably Government sourced and from more than one organisation) of the claims with the methodology and data acquisition methods detailed Multiple sources for data collection (i.e. triangulation) To be fair to all the organisation's in the presentation from Bitwise we would need longitudinal data from all 10 of the ‘squeaky clean’ exchanges detailed in the study for independent analysis for any abnormalities and irregularities (at least five years worth) The last point is especially important considering Kraken as recent as April of 2018 refused (quite insultingly) to answer the New York Attorney General’s inquiry into the ecosystem [https://www.coindesk.com/kraken-ceo-crypto-exchange-wont-comply-with-new-york-inquiry ; https://cointelegraph.com/news/kraken-ny-attorney-generals-inquiry-publicity-stunt-japans-vc-act-good-example] I hope my thoughts have been useful and you will understand why it is essential to deny these products until more observations of this ecosystem have been undertaken. It is not the right time to approve a Bitcoin ETF so please don't proceed. Best Regards, Martyn PHD, MBA, BSc Engg Sent from Outlook