This week we examine how close BTC came to breaking $17,000, again try to remind you to be careful before making any initial investments at these levels, and why. We also go over the history of the SEC’s relationship with bitcoin, how they are vamping up efforts to fight crypto-crime, and why criminals may have new reasons to worry about trying to get away with market manipulation, money laundering and theft – unless you are a banker on Wall Street who has the government in your pocket, of course…

 

What Bubble?

As the price of BTC continues its flight into the heavens, with prices approaching the $17,000 mark (as of the writing of this article), the divide between hardcore community members who believe bitcoin is still in a bubble (known as the “bubble camp”), and those who see the price on a more-or-less endless ascent (we can only safely label them as “dreamers” for the moment), we should remind ourselves that this is not the first year bitcoin has been declared to be in a bubble, and that even if a 20+% correction were to happen tomorrow, this would only be the latest of many “deaths” which bitcoin has suffered through its storied existence.

By all media accounts the number of times which bitcoin has “died” has already surpassed the 200 mark, which is an extremely impressive number by any measure. For now, bitcoin remains alive and well, now the grandfather and mentor of hundreds of other cryptocurrencies that have followed suit. Perhaps there will be a day in which several negative factors all collide in order to cause a massive price correction (or “bubble burst” if you are less optimistic), and with the impending approval and launch of a number of financial market vehicles that will allow for the indirect trading of bitcoin by Wall Street and other major markets worldwide, and this day may come sooner than anybody thinks.

If it did, this would mirror the occurrence of the steep market drop-offs seen in the Great Recession of ’08-’09, which nobody saw coming – unless you were one of the handful of major banking executives (known as the “Wizards of Wall Street”) that knew it was coming. They knew it was coming because all the while during market’s rapid and baseless rise in the years preceding the recession, they corroborated with each other to maximize profits during the market’s collapse; basically secretly coordinating with each other as to when they should all push the “sell” button at the same time.

Perhaps even more amazingly, not a single one of them ever faced jailtime, despite ruining the lives and 401Ks of millions of Americans and triggering a global financial panic that threw the whole world into a funk and feelings of helplessness. Some countries faced full-on economic meltdowns from which they have yet to fully recover, others actually demonstrated more strength, courage and morality than the U.S. government by jailing bankers who knew they were ripping off their own customers. Now that the same brood of destructive sociopaths have gotten their dirty mits on bitcoin, it is highly likely they will continue to use their unwieldly and unchecked powers to coordinate a similar BTC market manipulation.

Long story short: Now that Wall Street is involved with bitcoin, new investors need to be extra wary before entering the world of BTC trading, given the long and chronicled history of manipulation and abuse of public trust by the CEOs of major financial institutions, of which the government usually has their back (instead of the public’s back, however fair or unfair). It could be said that in addition to all being fair in love and war, all is fair when it comes to playing the markets as well.

Multi-Million Dollar BTC Heists Spur SEC into Action (and they’re not joking around this time)

Mark Karpeles, the disgraced and heavily-litigated ex-CEO of the original bitcoin exchange, MtGOX, was one of the first public figures to go under the eye of the SEC (Securities and Exchange Commission – the federal financial regulatory body that oversees the building and implementation of policies regarding  the transfer, holding and taxation of anything of value), after hundreds of millions of customer bitcoin funds suddenly “disappeared” overnight, including Karpeles himself, who only recently surrendered himself to authorities in Japan after a couple years on the run. This was the first time in which the SEC’s interest in bitcoin was heavily piqued.

In the time since court proceedings against Karpeles began in July of this year, the SEC has started dedicating an even larger share of its resources into the examination of cryptocurrency-related fraud. One of their first MtGOX findings that they acted upon was working with international governments to shut down the once heavily-volumed BTC-E exchange, where a large amount of money stolen in the MtGOX heist ended up being “tumbled,” traded or otherwise laundered. Those behind the MtGOX heist preferred to launder their stolen coins through BTC-E because, at the time, its users could remain largely anonymous compared to their competitors, and because it operated outside of the United States, fears of a takedown by a U.S.-led agency were almost non-existent.

Largely to blame for the crackdown by the SEC is the rise of fraudulent ICOs, in which investors have been swindled out of a record amount of money in 2017. The SEC first tried to warn the public about the dangers of ICO investing in August, but now they are actively stepping up efforts to bring crypto-criminals to justice, as the level of ICO fraud has reached monstrous proportions. In most cases, pre-existing local and federal laws are enough to prosecute ICO fraudsters on simple, common grounds of theft, fraud, embezzlement, or operating an investment group without a license. Giant-size hacks of major exchanges are also likely to be the subject of future federal scrutiny, as exchanges like NiceHash recently reported “losing” over $60 million in user funds in what they claim was a sophisticated hacking operation.

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