15 ms·

This seems like a weak paper on the face of it, especially considering it is coming from a criminal justice journal and not a quantitative finance journal. The

by ipnon 6y ago

This seems like a weak paper on the face of it, especially considering it is coming from a criminal justice journal and not a quantitative finance journal. The existence of pump and dumps, I would say, is obvious, in and out of crypto. But this paper fails by lacking a method to confidently detect pump and dump schemes. They successfully detect 2 of 4 schemes, no better than a coin toss. You might say this is better than nothing, but 50% is not really enough to either protect or extend your portfolio in the face of an impending pump and dump. Assuredly there are many crypto hedge funds able to predict pump and dumps with much higher accuracy, but they are keeping the methods to themselves to protect their intellectual property.

dgellow 6y ago
For a better approach, you can check this paper from 2020: https://arxiv.org/pdf/2005.06610.pdf https://arxiv.org/pdf/2005.06610.pdf. Quote from the paper: > Not only our performances are considerably better than theirs, we score 93.1% of precision and 91.4% recall against their 50.1% precision and 75.0% recall, but our detector is also faster.
- sosuke 6y ago
  Makes me wonder what they would say about the current market.
  - arcticbull 6y ago
    Well, if it found a pump and dump it would say "call the SEC." Thing is, the stock market may be erratic on smaller timescales but it is a legitimate and fair place to trade, and people roughly speaking all have access to the same information when making those trades. Speculative mania is not a pump and dump. It's poor decision making, and generally speaking, that's not illegal. On the other hand, if I start a stable coin, let's call it Anchor. Then I get a bunch of un-banked exchanges to use it in lieu of dollars because they can't get legitimate banking and don't want to bother with AML, KYC, the sanctions list or enabling international terrorism. I then start printing 750 million totally un-backed Anchors per day. I then use them to buy Bitcoin to drive the price up parabolically. I then sell all my Bitcoin for dollars to the most recent institutional clowns invested, and flee from the island I currently reside on to a different island. That's crime.
    - rglullis 6y ago
      Started reading a comment full of false equivalences and trying to put all projects and people working on crypto as criminals and yes, of course it is the guy with the inappropriate username. I am not going to defend Tether, I truly wish they disappeared into a ball of fire and took every crook with them. However, you could avoid the hyperbole. There are ~14 billion USDT minted, and BTC alone is going for a market cap of 500bi. The top 3 "serious" exchanges are all averaging $1bi+ in daily volume (and if you believe they are doing wash trading, Uniswap alone is in the same ballpark and wash trading there would be very costly). Tether is bad, but to think they are able to prop BTC (and crypto in general) to this bubble is delusional. Also, it's interesting how you downplay the fact that the Fed printed 22% of the dollars in circulation in 2020 alone with the majority of it destined to bail out banks and surely to end up under control of Wall Street. Also interesting how you seem to be so bothered by the lack of KYC/AML of some exchanges and pull the "enabling terrorism" card, yet you see no problem in the Stimulus Bill having 10 million dollars for Pakistan. Perhaps if the crypto projects start saying that the funds are going to gender studies your worries will be eased?
      - arcticbull 6y ago
        I didn't realize a synonym for a muskox was an inappropriate name lol. Just wait till you hear what other animals are named! For your reference I've attached a photo of the eponymous magnificent beast in question [0]. There are ~14 billion USDT minted, and BTC alone is going for a market cap of 500bi. $14B my dude, that information is stale as all heck. They're printing $700 million dollars worth per day right now. Their market cap just reached $24B. Remember just days ago when microstrat announced a blockbuster $400M investment? Tether prints that every 12 hours. See the way market cap works is you only have to control the most recent trade to set the market cap. That means literally nothing. The old trope goes if you print 1 trillion of your own crypto and sell it to a buddy for $1, that's a $1T market cap. $24B of cash, with $700M new printed every single day buying up Bitcoin is absolutely enough to control the price. That's simple economics, and you can find an explanation anywhere. I can of course provide you with an article if you find yourself unable to obtain one. > Also, it's interesting how you downplay the fact that the Fed printed 22% of the dollars in circulation in 2020 alone with the majority of it destined to bail out banks and surely to end up under control of Wall Street. This is utterly irrelevant. The inflation rate is trending around 2% per annum. If that goes up, they'll print less or claw back more. Supply is not the only factor in the determination of inflation, velocity of money is critical. I suggest you learn more about the money supply before trying to reinvent it. In fact if we pretend for a moment that bitcoin is a currency, you can see that while the supply is flat-ish, the price is skyrocketing. This is massively deflationary for a currency, and this is in fact, in part, due to a reduction in velocity of money (aka HODL BRUH). > Perhaps if the crypto projects start saying that the funds are going to gender studies your worries will be eased? I have no idea where you're going with that and I won't be following you. This has nothing to do with social policy and everything to do with the North Korean government collecting hundreds of millions of dollars to fund their nuclear weapons program. [0] https://www.alaskaphotographics.com/alaska-photo-articles/muskox-photos/ https://www.alaskaphotographics.com/alaska-photo-articles/mu...
dorkwood 6y ago
> They successfully detect 2 of 4 schemes, no better than a coin toss. How would you go about detecting a pump and dump scheme by flipping a coin?
- mckirk 6y ago
  That's simple! You think "this is probably a pump-and-dump", then flip a coin and go post about it on Twitter if it comes up heads.
- alexpetralia 6y ago
  1. Assign pump-and-dump scheme to heads 2. Flip coin 3. Evaluate results
  - dorkwood 6y ago
    Kind of seems like you detected it at step 1.
ethn 6y ago
50% is a bit better than you think. If you were to do a coin toss on each as a basis of determination you would only have a 25% chance of getting 2 correct. As n-schemes becomes larger, the coin toss does much worse in respect to the Bayesian probability.
- fsdfgsfsdfsdfsd 6y ago
  But they were detecting 2 out of 4, not 2 out of 2. I think you are incorrect.
  - LukeShu 6y ago
    I think they're both incorrect. They ran the model on historical data. Of 4 a priori known P&Ds, the model detected 2 of them. To say that they've got accuracy of a 50% or "no better than a coin toss", ignores all of the non-P&D events that it correctly didn't identify as a P&D. If you did a coin toss, you would flip the coin much more than 4 times.
    - fsdfgsfsdfsdfsd 6y ago
      True
    - rossdavidh 6y ago
      You really would also want to have some sort of loss function, or at the very least a general idea of whether you most need to avoid false positives or false negatives. If it was most important to avoid incorrectly saying it's NOT a P&D, then this is not good performance. If you need it to nearly always avoid saying something which is not a P&D (and thus might be a great investment opportunity), but given that you want to avoid as many as you can, 50% might be good.
      - deleted 6y ago
        [deleted]
- analyst74 6y ago
boublepop 6y ago
> They successfully detect 2 of 4 schemes, no better than a coin toss. Let’s be real here if I developed an indicator that identified murderers and I showed you that out of the last 4 murders happened in US, I identified 2 of them using this identifier, would you say that I did no better than a coin toss? There is a lot more to this than just going yes/no when presented after the fact with a situation that you feel that you know for sure is a pump-and-dump.

by ipnon 6y ago

dgellow 6y ago

For a better approach, you can check this paper from 2020: https://arxiv.org/pdf/2005.06610.pdf https://arxiv.org/pdf/2005.06610.pdf. Quote from the paper: > Not only our performances are considerably better than theirs, we score 93.1% of precision and 91.4% recall against their 50.1% precision and 75.0% recall, but our detector is also faster.

sosuke 6y ago
Makes me wonder what they would say about the current market.
- arcticbull 6y ago
  Well, if it found a pump and dump it would say "call the SEC." Thing is, the stock market may be erratic on smaller timescales but it is a legitimate and fair place to trade, and people roughly speaking all have access to the same information when making those trades. Speculative mania is not a pump and dump. It's poor decision making, and generally speaking, that's not illegal. On the other hand, if I start a stable coin, let's call it Anchor. Then I get a bunch of un-banked exchanges to use it in lieu of dollars because they can't get legitimate banking and don't want to bother with AML, KYC, the sanctions list or enabling international terrorism. I then start printing 750 million totally un-backed Anchors per day. I then use them to buy Bitcoin to drive the price up parabolically. I then sell all my Bitcoin for dollars to the most recent institutional clowns invested, and flee from the island I currently reside on to a different island. That's crime.
  - rglullis 6y ago
    Started reading a comment full of false equivalences and trying to put all projects and people working on crypto as criminals and yes, of course it is the guy with the inappropriate username. I am not going to defend Tether, I truly wish they disappeared into a ball of fire and took every crook with them. However, you could avoid the hyperbole. There are ~14 billion USDT minted, and BTC alone is going for a market cap of 500bi. The top 3 "serious" exchanges are all averaging $1bi+ in daily volume (and if you believe they are doing wash trading, Uniswap alone is in the same ballpark and wash trading there would be very costly). Tether is bad, but to think they are able to prop BTC (and crypto in general) to this bubble is delusional. Also, it's interesting how you downplay the fact that the Fed printed 22% of the dollars in circulation in 2020 alone with the majority of it destined to bail out banks and surely to end up under control of Wall Street. Also interesting how you seem to be so bothered by the lack of KYC/AML of some exchanges and pull the "enabling terrorism" card, yet you see no problem in the Stimulus Bill having 10 million dollars for Pakistan. Perhaps if the crypto projects start saying that the funds are going to gender studies your worries will be eased?
    - arcticbull 6y ago
      I didn't realize a synonym for a muskox was an inappropriate name lol. Just wait till you hear what other animals are named! For your reference I've attached a photo of the eponymous magnificent beast in question [0]. There are ~14 billion USDT minted, and BTC alone is going for a market cap of 500bi. $14B my dude, that information is stale as all heck. They're printing $700 million dollars worth per day right now. Their market cap just reached $24B. Remember just days ago when microstrat announced a blockbuster $400M investment? Tether prints that every 12 hours. See the way market cap works is you only have to control the most recent trade to set the market cap. That means literally nothing. The old trope goes if you print 1 trillion of your own crypto and sell it to a buddy for $1, that's a $1T market cap. $24B of cash, with $700M new printed every single day buying up Bitcoin is absolutely enough to control the price. That's simple economics, and you can find an explanation anywhere. I can of course provide you with an article if you find yourself unable to obtain one. > Also, it's interesting how you downplay the fact that the Fed printed 22% of the dollars in circulation in 2020 alone with the majority of it destined to bail out banks and surely to end up under control of Wall Street. This is utterly irrelevant. The inflation rate is trending around 2% per annum. If that goes up, they'll print less or claw back more. Supply is not the only factor in the determination of inflation, velocity of money is critical. I suggest you learn more about the money supply before trying to reinvent it. In fact if we pretend for a moment that bitcoin is a currency, you can see that while the supply is flat-ish, the price is skyrocketing. This is massively deflationary for a currency, and this is in fact, in part, due to a reduction in velocity of money (aka HODL BRUH). > Perhaps if the crypto projects start saying that the funds are going to gender studies your worries will be eased? I have no idea where you're going with that and I won't be following you. This has nothing to do with social policy and everything to do with the North Korean government collecting hundreds of millions of dollars to fund their nuclear weapons program. [0] https://www.alaskaphotographics.com/alaska-photo-articles/muskox-photos/ https://www.alaskaphotographics.com/alaska-photo-articles/mu...

dorkwood 6y ago

> They successfully detect 2 of 4 schemes, no better than a coin toss. How would you go about detecting a pump and dump scheme by flipping a coin?

mckirk 6y ago
That's simple! You think "this is probably a pump-and-dump", then flip a coin and go post about it on Twitter if it comes up heads.
alexpetralia 6y ago
1. Assign pump-and-dump scheme to heads 2. Flip coin 3. Evaluate results
- dorkwood 6y ago
  Kind of seems like you detected it at step 1.

ethn 6y ago

50% is a bit better than you think. If you were to do a coin toss on each as a basis of determination you would only have a 25% chance of getting 2 correct. As n-schemes becomes larger, the coin toss does much worse in respect to the Bayesian probability.

fsdfgsfsdfsdfsd 6y ago
But they were detecting 2 out of 4, not 2 out of 2. I think you are incorrect.
- LukeShu 6y ago
  I think they're both incorrect. They ran the model on historical data. Of 4 a priori known P&Ds, the model detected 2 of them. To say that they've got accuracy of a 50% or "no better than a coin toss", ignores all of the non-P&D events that it correctly didn't identify as a P&D. If you did a coin toss, you would flip the coin much more than 4 times.
  - fsdfgsfsdfsdfsd 6y ago
    True
  - rossdavidh 6y ago
    You really would also want to have some sort of loss function, or at the very least a general idea of whether you most need to avoid false positives or false negatives. If it was most important to avoid incorrectly saying it's NOT a P&D, then this is not good performance. If you need it to nearly always avoid saying something which is not a P&D (and thus might be a great investment opportunity), but given that you want to avoid as many as you can, 50% might be good.
    - deleted 6y ago
      [deleted]
analyst74 6y ago

boublepop 6y ago

> They successfully detect 2 of 4 schemes, no better than a coin toss. Let’s be real here if I developed an indicator that identified murderers and I showed you that out of the last 4 murders happened in US, I identified 2 of them using this identifier, would you say that I did no better than a coin toss? There is a lot more to this than just going yes/no when presented after the fact with a situation that you feel that you know for sure is a pump-and-dump.