Open market manipulations – a catastrophe for traditional safe heavens

School of business at the University of Sussex has recently published the study showing that common market manipulations represent a major problem.

Insider trading and abuse.

Over the recent months CryptoMarketRisk team at University of Sussex business school have been monitoring deals on crypto and gold markets and detecting large dumps of copper futures, big sale orders for gold and spoofing orders on key crypto exchanges.

The team has defined that one of the deals on COMEX was so huge that it affected the assets’ prices which was the direct violation of the US law concerning abuses in the industry. COMEX is widely known as Commodity exchange that is the New York Mercantile Exchange subdivision that is trading metal (aluminum, silver, gold and copper) futures.

The uncontrolled volatility on the market implies that such regulators as Commodity Futures Trading Comission (CFTC) have plenty of work since large manipulations in the industry still have to be investigated by regulators.

Karol Alexander, one the business school professors, said, “We can expect growth in demand for gold and cryptos because the funds are renouncing stocks. But this time the safe heavens behaved completely different. Gold and BTC both decreased at the same time as American stocks.

As S & P 500 collapsed in March, 2020, gold used to face the worst week in eight years which had been supposed to be the best due to large reductions of futures at COMEX. Bitcoin was also being manipulated by some obvious robots manipulators on non-registered exchanges for crypto derivatives, especially on BitMEX”. Alexander also noted that such enormous and frequent financial manipulations have hardly ever be seen before. Besides, several major players lack integrity, and this is what causes the largest global economy crisis.

Apart from those who publish deal orders, the main beneficiaries of market attacks are the US dollars and assets holders. They become the key sources for positive returns of global investors trying to restrict the recent tendency of some central banks to diverse their reserve assets from US dollar.

Bitfinex and Тether face manipulations and class action. With the crypto markets expansion and the appearance of new buyers and sellers that want to make profit on their deals, market manipulations have become even more frequent. Forgets can manipulate the crypto trading process, providing fake information and misleading investors to make them buy certain assets. Such manipulations represent a serious obstacle and a problem for investors.  Last year the New York law firm Roche Freedman brought a case against Tether and Bitfinex for crypto manipulations and creating bubbles to profit from rises and falls. The suit says that Tether and Bitfinex were both involved in money laundering, crypto boosting and large sales, and also participated in a complicated scheme for defrauding investors.

Thus, the regulators bear the responsibility for protecting crypto investors and consumers as well as for creating the innovation environment to utilize the potential of blockchain advances.