17 ms·

Scammers Using Fake News to Screw with Bitcoin Investors

115 points by pgrote 9y ago

payne92 9y ago
There's an adage in poker that's applicable to crypto trading: if you don't know who the sucker is at the table....it's probably you.
- JonnyNova 9y ago
  If you don't know who the bag holder is going to be, it is you!
- minikomi 9y ago
  .. know when to hodl 'em, know when to fodl 'em?
  - FLUX-YOU 9y ago
    You're not allowed to make decisions in the crypto meme sphere. Only hodl.
- klenwell 9y ago
  One of the plot points of The Big Short that I found interesting was Mark Baum character finally discovering who was on the other side of the swap he buys from Jared Vennett at Deutsche Bank. And then you had the whole Florida subplot showing how the housing bubble entangled people all the way down the food chain. I'm still not clear who the suckers are in these cryptocoin markets that are driving up the price. I'm starting to hear stories about barbers and janitors and friends of friends buying in. I guess it got popular enough in South Korea that the government had to step in. How mainstream has crypto trading gone? Who are the suckers?
  - dsp1234 9y ago
    I'm still not clear who the suckers are in these cryptocoin markets that are driving up the price. It's my coworker who is HODL'ing because "it's got better returns than our 401(k)".
  - stingraycharles 9y ago
    > How mainstream has crypto trading gone? Who are the suckers? I would say it's the early majority now. But it has reached the point where I see people following crypto stocks in the train regularly, and apparently all of my non-techie friends (teacher, historian, etc) all own a small chunk of crypto stocks now.
    - alanfalcon 9y ago
      “Stocks” That’s such an unfortunate metaphor for crypto.
  - Balgair 9y ago
    It's a hard question with no good answer. However, if you are asking who the suckers are, you can be pretty sure you aren't a sucker. For the lurkers, if you are reading this on HN, odds are that you are not a sucker. That said, know your price and sell, don't try to game markets.
    - JumpCrisscross 9y ago
      > if you are asking who the suckers are, you can be pretty sure you aren't a sucker This is literally the opposite of the adage. It doesn’t say “if you never asked who the sucker is, you’re the sucker.” It’s “if you can’t identify the sucker, you’re the sucker.” With Bitcoin, everyone who isn’t an exchange or getting paid to promote an ICO is probably a sucker.
      - Balgair 9y ago
        I don't believe so. The suckers are the barbers in the oilfields and Kennedy's shoe-shiners. If you are wise enough to know there are suckers in the first place, you'll likely take steps to avoid being one.
        JumpCrisscross 9y ago
        > The suckers are the barbers In the adage about the shoe-shine boy handing out stock tips, the shoe-shine boy loses money. But so does everyone else. The non-suckers are the ones who sold and settled for cash before shit hit the fan. > If you are wise enough to know there are suckers in the first place, you'll likely take steps to avoid being one The entire history of frauds and schemes flies in the fact of this hypothesis. Let's pick apart a recent one: Bitconnect. Many participants seemed to know it was a Ponzi scheme. At the end of the day, only the organizers and paid promoters who cashed out their BCC came out ahead.
        Balgair 9y ago
        > Many participants seemed to know it was a Ponzi scheme I mean, anyone that participates in a Pyramid scheme at any level is the definition of a sucker. Not a single one of them has ended well.
  - gnarcoregrizz 9y ago
    Everyone except the exchanges, particularly bitfinex, and some people creating coins and ICOs... and some hackers here and there
  - xr4ti 9y ago
    My tinfoil hat theory is that there is currently a giant transfer (or several transfers) of wealth going on outside of the purview of regulators (e.g. evasion of sanctions). The big uptick was the dark money moving into bitcoin and other cryptos. The bullish HODL propaganda is meant to pull in people to (a) provide camouflage, and (b) buttress/stabilize the price so the dark money can get out. And the suckers are the average Joes who are going to be left holding the bag once all the dark money moves out. This is pure speculation, and I have absolutely no evidence to back this up.
  - polskibus 9y ago
    It's been reported many times on HN, that even VCs from SV invested in cryptocurrencies directly - example: http://www.businessinsider.com/peter-thiels-founders-fund-invested-big-in-bitcoin-2018-1?IR=T http://www.businessinsider.com/peter-thiels-founders-fund-in... Not sure if they are the suckers or the pumpers in the context of the article.
- loceng 9y ago
  The problem is that the VC community and finance folk believe that they can maintain bringing enough of the masses to buy into these crypto-assets that they will gain "legitimacy" in that enough people will have a vested interest in them maintaining a certain value; all holders then of course will want to perpetuate its adoption until all of society is legitimizing its "present value."
Sangermaine 9y ago
This is just a link to the Hacker News front page.
- brndnmtthws 9y ago
  I appreciate your comment.
Theodores 9y ago
I think the bigger danger is from groupthink expectation that the coin markets follow a boom-bust on an annual basis due to the Chinese New Year. They see now as a good time to pick up cheap coin from Asia. They expect to be 3x up in the Autumn and to ride a wild ride up next Christmas to come crashing down in the Chinese New Year. These people believe there are only so many coins and that it is these coins that have value, regardless of how much they are worth in USD. For them it is how well their coin compares to bitcoin that matters. They think they can ride out any crash as they are 'bound' to be 10x up next year as more people start using crypto to store their wealth. I do not believe that most people giving bad advice on coin are deliberately giving bad advice or aware that their advice is founded on poor information, fear and greed. In this environment there is a frenzy to get in on the next ICO so scammers don't have to try very hard to scam. I can see that a bitcoin miner has put together a business model and with that some risk management. They calculate the ROI and hopefully they get the numbers right and profit after paying off the kit. However, I do not believe most coin 'investors' are doing risk management properly, they are like a herd of naive day traders from the 1990's losing their savings but getting ever more coin, thinking they are up because one of their coins is up against bitcoin. It is not so much the scammers but the echo chamber and the FOMO that is the problem here.
- justaman 9y ago
  There are hundreds of coins out there. 99% of them will fail. Even the 1% is a silly investment when compared to physical gold.
  - cendana 9y ago
    coins, so many coins here https://www.coingecko.com/en https://www.coingecko.com/en What 1% are compared to physical gold? I think only Bitcoin is usually compared to gold, Ethereum has a large supply and soft cap
  - rdlecler1 9y ago
    Can you justify that? Other than jewelery and some industrial purposes what makes gold so valuable?
ravenstine 9y ago
These are really old scams – it's just that they're now being applied to a different market.
- JumpCrisscross 9y ago
  > These are really old scams – it's just that they're now being applied to a different market Bitcoin is the Conquistadors landing on the Americas and decimating the natives with foreign diseases. Mainline markets had pump and dumps. People got wary and regulatory institutions were born to fight the malaise. The regulators were successful. Pump and dumps are largely unheard of in large-cap U.S. equities. With the threat neutered, common memory faded. Blissfully unaware, investors relinquished the protection of their regulators, cursing them as they shut the door, and wandered out unprotected and unwary. Almost without delay the entire menagerie of foul schemes emerged: pump and dumps, exchange failures, ticker painting, Ponzi schemes, et cetera.
  - wu-ikkyu 9y ago
    >The regulators were so successful that pump and dumps are largely unheard of in large-cap U.S. equities. Wasn't the 2008 stock market crash caused by the housing market being "pumped and dumped"?
    - FLUX-YOU 9y ago
      Not really, that was much more of a systemic issue, so it's difficult to point to one entity responsible. Those problems built up over years. Pump and dumps by contrast have a much shorter time frame.
      - wu-ikkyu 9y ago
        So if a pump and dump gets big enough and goes on long enough, it can't be described as such? Even though the price was artificially inflated and investors were fed false information?
ska 9y ago
s/investors/speculators/g
- exolymph 9y ago
  Speculators are a type of investor.
  - inanutshellus 9y ago
    and, being a subset, his point still stands.
simias 9y ago
Offtopic pet peeve: I'm really annoyed that "Fake News" seems to have replaced the perfectly cromulent "disinformation". What's worse it's even commonly used as-is in french as well, because apparently it's still cool to drop random english words while speaking french.
- dbatten 9y ago
  Additional observation: it's also interesting to me that the term seems to be having a resurgence of late? It started out largely being an accusatory term used by the American political left to disparage biased and/or incorrect information spread by Trump supporters (mostly, anyway). But then Trump and his supporters decided two could play at that game, and it became almost exclusively a term used by the Trump/Fox News crowd to bash the left. As a result, the left stopped using it as quickly as they had started, and the term all but disappeared from respectable news sources. Now, a year and change later, it seems to be coming back. No point here other than it's fascinating how trends in culture stop, start, and change with time.
  - jordigh 9y ago
    No, "fake news" refers to a very specific phenomenon. It's not just any kind of misleading or incorrect reporting. Trump was the one to start saying "not fake news, YOU'RE fake news", but the phenomenon as initially encountered was about shoddy and small fraudulent websites, often trying to deceive their audience to believe that they were a different website, pushing the most anger-inducing news. It wasn't about left vs right (and why are those the only two options, argh). It's a far cry from the NYT or Fox News reporting incorrect things, whether deliberately or not, to someone called Foxx News or Non York Times reporting that Islam causes prostate cancer. If you look at the list here, it's all over the political spectrum, some of it is just plain apolitical scams like the Hawking Scam on a CNN knockoff website or celebrity stalking: https://en.wikipedia.org/wiki/List_of_fake_news_websites#List https://en.wikipedia.org/wiki/List_of_fake_news_websites#Lis...
    - dbatten 9y ago
      I don't disagree with you that "fake news" started out as a reference to a very specific phenomenon... it's just interesting that the term very quickly became a political cudgel. I think the transition from useful, specific term to political weapon is part of what makes it an intriguing study in how terms disseminate in culture. It's like "disruptive" - a highly specific term referencing a very particular business strategy that got abused to mean just about anything people wanted as it had its moment of popularity. I also sympathize with your frustration with politics being framed as left/right. I consider myself pretty libertarian, so I often find myself raging against that divide. Nevertheless, that doesn't change the fact that as a matter of practical reality, politics in this country is framed that way, and that shapes how terms are used, how arguments are made, and how things are portrayed in the media...
zerostar07 9y ago
These are happening literally all the time, mcaffee's name has been used to pump a few of the coins but its not that effective anymore. there's a tool to spot them [1] [1] https://coinzaa.com/tools/ https://coinzaa.com/tools/
thisisit 9y ago
This happens even in real markets let alone cryptocurrencies. You will find people pumping stocks on news that it might be bought by Amazon or something.
- loceng 9y ago
  And you have people trying to lobby for war, so certain stocks will perform better or worse; adding into the mix the ability to make money off of predicting future failure of a company/organization incentivizes bad behaviour even further.
- prklmn 9y ago
  That’s true, but pumping and dumping is indeed co sidered securities fraud, so there’s an incentive not to do it in the stock market. Cryptocurrencies aren’t considered securities by definition, so it’s open season to whoever would like to participate in market manipulation.
  - JumpCrisscross 9y ago
    > Cryptocurrencies aren’t considered securities This has not yet been decided [1][2]. [1] https://www.bu.edu/jostl/files/2016/01/21.1_Alberts_Final_web.pdf https://www.bu.edu/jostl/files/2016/01/21.1_Alberts_Final_we... [2] http://apps.americanbar.org/buslaw/newsletter/0014/materials/investmentch2.pdf http://apps.americanbar.org/buslaw/newsletter/0014/materials...
KasianFranks 9y ago
This has been happening with stocks for quite some time e.g. https://en.wikipedia.org/wiki/Timothy_Sykes https://en.wikipedia.org/wiki/Timothy_Sykes which included bots, astroturfing and fake soc net profiles.
wils1245 9y ago
The decentralized nature of cryptocurrencies means that implementing countermeasures to market manipulation is severely hampered. It's a fatal flaw of to the idea of cryptocurrencies as something socially useful.
leecarraher 9y ago
I generally disregard bitcoin speculation and opinion articles. Not just because it seems bitcoin market prices are hard to predict, but also due to the fact that bitcoin, being an unregulated market(for better or worse), means that otherwise illegal practices for the stock market(e.g. pump and dump) are legal.
omegbule 9y ago
This is also called having 'weak hands' by the cryptocurrency community.

115 points by pgrote 9y ago

There's an adage in poker that's applicable to crypto trading: if you don't know who the sucker is at the table....it's probably you.

JonnyNova 9y ago
If you don't know who the bag holder is going to be, it is you!
minikomi 9y ago
.. know when to hodl 'em, know when to fodl 'em?
- FLUX-YOU 9y ago
  You're not allowed to make decisions in the crypto meme sphere. Only hodl.
klenwell 9y ago
One of the plot points of The Big Short that I found interesting was Mark Baum character finally discovering who was on the other side of the swap he buys from Jared Vennett at Deutsche Bank. And then you had the whole Florida subplot showing how the housing bubble entangled people all the way down the food chain. I'm still not clear who the suckers are in these cryptocoin markets that are driving up the price. I'm starting to hear stories about barbers and janitors and friends of friends buying in. I guess it got popular enough in South Korea that the government had to step in. How mainstream has crypto trading gone? Who are the suckers?
- dsp1234 9y ago
  I'm still not clear who the suckers are in these cryptocoin markets that are driving up the price. It's my coworker who is HODL'ing because "it's got better returns than our 401(k)".
- stingraycharles 9y ago
  > How mainstream has crypto trading gone? Who are the suckers? I would say it's the early majority now. But it has reached the point where I see people following crypto stocks in the train regularly, and apparently all of my non-techie friends (teacher, historian, etc) all own a small chunk of crypto stocks now.
  - alanfalcon 9y ago
    “Stocks” That’s such an unfortunate metaphor for crypto.
- Balgair 9y ago
  It's a hard question with no good answer. However, if you are asking who the suckers are, you can be pretty sure you aren't a sucker. For the lurkers, if you are reading this on HN, odds are that you are not a sucker. That said, know your price and sell, don't try to game markets.
  - JumpCrisscross 9y ago
    > if you are asking who the suckers are, you can be pretty sure you aren't a sucker This is literally the opposite of the adage. It doesn’t say “if you never asked who the sucker is, you’re the sucker.” It’s “if you can’t identify the sucker, you’re the sucker.” With Bitcoin, everyone who isn’t an exchange or getting paid to promote an ICO is probably a sucker.
    - Balgair 9y ago
      I don't believe so. The suckers are the barbers in the oilfields and Kennedy's shoe-shiners. If you are wise enough to know there are suckers in the first place, you'll likely take steps to avoid being one.
      - JumpCrisscross 9y ago
        > The suckers are the barbers In the adage about the shoe-shine boy handing out stock tips, the shoe-shine boy loses money. But so does everyone else. The non-suckers are the ones who sold and settled for cash before shit hit the fan. > If you are wise enough to know there are suckers in the first place, you'll likely take steps to avoid being one The entire history of frauds and schemes flies in the fact of this hypothesis. Let's pick apart a recent one: Bitconnect. Many participants seemed to know it was a Ponzi scheme. At the end of the day, only the organizers and paid promoters who cashed out their BCC came out ahead.
        Balgair 9y ago
        > Many participants seemed to know it was a Ponzi scheme I mean, anyone that participates in a Pyramid scheme at any level is the definition of a sucker. Not a single one of them has ended well.
- gnarcoregrizz 9y ago
  Everyone except the exchanges, particularly bitfinex, and some people creating coins and ICOs... and some hackers here and there
- xr4ti 9y ago
  My tinfoil hat theory is that there is currently a giant transfer (or several transfers) of wealth going on outside of the purview of regulators (e.g. evasion of sanctions). The big uptick was the dark money moving into bitcoin and other cryptos. The bullish HODL propaganda is meant to pull in people to (a) provide camouflage, and (b) buttress/stabilize the price so the dark money can get out. And the suckers are the average Joes who are going to be left holding the bag once all the dark money moves out. This is pure speculation, and I have absolutely no evidence to back this up.
- polskibus 9y ago
  It's been reported many times on HN, that even VCs from SV invested in cryptocurrencies directly - example: http://www.businessinsider.com/peter-thiels-founders-fund-invested-big-in-bitcoin-2018-1?IR=T http://www.businessinsider.com/peter-thiels-founders-fund-in... Not sure if they are the suckers or the pumpers in the context of the article.
loceng 9y ago
The problem is that the VC community and finance folk believe that they can maintain bringing enough of the masses to buy into these crypto-assets that they will gain "legitimacy" in that enough people will have a vested interest in them maintaining a certain value; all holders then of course will want to perpetuate its adoption until all of society is legitimizing its "present value."

Sangermaine 9y ago

This is just a link to the Hacker News front page.

brndnmtthws 9y ago
I appreciate your comment.

Theodores 9y ago

I think the bigger danger is from groupthink expectation that the coin markets follow a boom-bust on an annual basis due to the Chinese New Year. They see now as a good time to pick up cheap coin from Asia. They expect to be 3x up in the Autumn and to ride a wild ride up next Christmas to come crashing down in the Chinese New Year. These people believe there are only so many coins and that it is these coins that have value, regardless of how much they are worth in USD. For them it is how well their coin compares to bitcoin that matters. They think they can ride out any crash as they are 'bound' to be 10x up next year as more people start using crypto to store their wealth. I do not believe that most people giving bad advice on coin are deliberately giving bad advice or aware that their advice is founded on poor information, fear and greed. In this environment there is a frenzy to get in on the next ICO so scammers don't have to try very hard to scam. I can see that a bitcoin miner has put together a business model and with that some risk management. They calculate the ROI and hopefully they get the numbers right and profit after paying off the kit. However, I do not believe most coin 'investors' are doing risk management properly, they are like a herd of naive day traders from the 1990's losing their savings but getting ever more coin, thinking they are up because one of their coins is up against bitcoin. It is not so much the scammers but the echo chamber and the FOMO that is the problem here.

justaman 9y ago
There are hundreds of coins out there. 99% of them will fail. Even the 1% is a silly investment when compared to physical gold.
- cendana 9y ago
  coins, so many coins here https://www.coingecko.com/en https://www.coingecko.com/en What 1% are compared to physical gold? I think only Bitcoin is usually compared to gold, Ethereum has a large supply and soft cap
- rdlecler1 9y ago
  Can you justify that? Other than jewelery and some industrial purposes what makes gold so valuable?

ravenstine 9y ago

These are really old scams – it's just that they're now being applied to a different market.

JumpCrisscross 9y ago
> These are really old scams – it's just that they're now being applied to a different market Bitcoin is the Conquistadors landing on the Americas and decimating the natives with foreign diseases. Mainline markets had pump and dumps. People got wary and regulatory institutions were born to fight the malaise. The regulators were successful. Pump and dumps are largely unheard of in large-cap U.S. equities. With the threat neutered, common memory faded. Blissfully unaware, investors relinquished the protection of their regulators, cursing them as they shut the door, and wandered out unprotected and unwary. Almost without delay the entire menagerie of foul schemes emerged: pump and dumps, exchange failures, ticker painting, Ponzi schemes, et cetera.
- wu-ikkyu 9y ago
  >The regulators were so successful that pump and dumps are largely unheard of in large-cap U.S. equities. Wasn't the 2008 stock market crash caused by the housing market being "pumped and dumped"?
  - FLUX-YOU 9y ago
    Not really, that was much more of a systemic issue, so it's difficult to point to one entity responsible. Those problems built up over years. Pump and dumps by contrast have a much shorter time frame.
    - wu-ikkyu 9y ago
      So if a pump and dump gets big enough and goes on long enough, it can't be described as such? Even though the price was artificially inflated and investors were fed false information?

ska 9y ago

s/investors/speculators/g

exolymph 9y ago
Speculators are a type of investor.
- inanutshellus 9y ago
  and, being a subset, his point still stands.

simias 9y ago

Offtopic pet peeve: I'm really annoyed that "Fake News" seems to have replaced the perfectly cromulent "disinformation". What's worse it's even commonly used as-is in french as well, because apparently it's still cool to drop random english words while speaking french.

dbatten 9y ago
Additional observation: it's also interesting to me that the term seems to be having a resurgence of late? It started out largely being an accusatory term used by the American political left to disparage biased and/or incorrect information spread by Trump supporters (mostly, anyway). But then Trump and his supporters decided two could play at that game, and it became almost exclusively a term used by the Trump/Fox News crowd to bash the left. As a result, the left stopped using it as quickly as they had started, and the term all but disappeared from respectable news sources. Now, a year and change later, it seems to be coming back. No point here other than it's fascinating how trends in culture stop, start, and change with time.
- jordigh 9y ago
  No, "fake news" refers to a very specific phenomenon. It's not just any kind of misleading or incorrect reporting. Trump was the one to start saying "not fake news, YOU'RE fake news", but the phenomenon as initially encountered was about shoddy and small fraudulent websites, often trying to deceive their audience to believe that they were a different website, pushing the most anger-inducing news. It wasn't about left vs right (and why are those the only two options, argh). It's a far cry from the NYT or Fox News reporting incorrect things, whether deliberately or not, to someone called Foxx News or Non York Times reporting that Islam causes prostate cancer. If you look at the list here, it's all over the political spectrum, some of it is just plain apolitical scams like the Hawking Scam on a CNN knockoff website or celebrity stalking: https://en.wikipedia.org/wiki/List_of_fake_news_websites#List https://en.wikipedia.org/wiki/List_of_fake_news_websites#Lis...
  - dbatten 9y ago
    I don't disagree with you that "fake news" started out as a reference to a very specific phenomenon... it's just interesting that the term very quickly became a political cudgel. I think the transition from useful, specific term to political weapon is part of what makes it an intriguing study in how terms disseminate in culture. It's like "disruptive" - a highly specific term referencing a very particular business strategy that got abused to mean just about anything people wanted as it had its moment of popularity. I also sympathize with your frustration with politics being framed as left/right. I consider myself pretty libertarian, so I often find myself raging against that divide. Nevertheless, that doesn't change the fact that as a matter of practical reality, politics in this country is framed that way, and that shapes how terms are used, how arguments are made, and how things are portrayed in the media...

zerostar07 9y ago

These are happening literally all the time, mcaffee's name has been used to pump a few of the coins but its not that effective anymore. there's a tool to spot them [1] [1] https://coinzaa.com/tools/ https://coinzaa.com/tools/

thisisit 9y ago

This happens even in real markets let alone cryptocurrencies. You will find people pumping stocks on news that it might be bought by Amazon or something.

loceng 9y ago
And you have people trying to lobby for war, so certain stocks will perform better or worse; adding into the mix the ability to make money off of predicting future failure of a company/organization incentivizes bad behaviour even further.
prklmn 9y ago
That’s true, but pumping and dumping is indeed co sidered securities fraud, so there’s an incentive not to do it in the stock market. Cryptocurrencies aren’t considered securities by definition, so it’s open season to whoever would like to participate in market manipulation.
- JumpCrisscross 9y ago
  > Cryptocurrencies aren’t considered securities This has not yet been decided [1][2]. [1] https://www.bu.edu/jostl/files/2016/01/21.1_Alberts_Final_web.pdf https://www.bu.edu/jostl/files/2016/01/21.1_Alberts_Final_we... [2] http://apps.americanbar.org/buslaw/newsletter/0014/materials/investmentch2.pdf http://apps.americanbar.org/buslaw/newsletter/0014/materials...

KasianFranks 9y ago

This has been happening with stocks for quite some time e.g. https://en.wikipedia.org/wiki/Timothy_Sykes https://en.wikipedia.org/wiki/Timothy_Sykes which included bots, astroturfing and fake soc net profiles.

wils1245 9y ago

The decentralized nature of cryptocurrencies means that implementing countermeasures to market manipulation is severely hampered. It's a fatal flaw of to the idea of cryptocurrencies as something socially useful.

leecarraher 9y ago

I generally disregard bitcoin speculation and opinion articles. Not just because it seems bitcoin market prices are hard to predict, but also due to the fact that bitcoin, being an unregulated market(for better or worse), means that otherwise illegal practices for the stock market(e.g. pump and dump) are legal.

omegbule 9y ago

This is also called having 'weak hands' by the cryptocurrency community.