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One thing sticks out as a red flag to me: they invented their own spot index (the Winkdex(R)) to price their NAV and that index includes BTC-e. BTC-e is a widel

One thing sticks out as a red flag to me: they invented their own spot index (the Winkdex(R)) to price their NAV and that index includes BTC-e. BTC-e is a widely used site in the Bitcoin world, but no one knows who operates it or exactly where they are located (Bulgaria? Russia?). You would seriously base a large component of your index pricing an SEC regulated instrument on a number coming from unknown individuals who can not sign a contract or accept any liability? When people in the Bitcoin world always wonder "Why did X not include BTC-e?? How incompetent!" they never stop to think that there is no one on the other side that can pick up the pen.

minimax 12y ago
This could be one of the reasons the SEC hasn't approved the ETF for sale to the public. The first S-1 for this ETF is dated 2013-07-01, so it's not like the SEC hasn't had time to look at it. That said, there is a whole universe of bizarro exchange traded products in the US equity market so who really knows. I don't think the feedback from the SEC to the Winklevoss brothers has been made public.
rockyleal 12y ago
That's just being consistent with the reality of the Bitcoin market. BTC-e, whatever its structure, is one of the main Bitcoin exchanges, and as such it is necessary that it is represented in the index, else the index would present a distorted picture of the real market.
sheetjs 12y ago
> that index includes BTC-e Not necessarily. All they say is: > The Index Provider’s Winkdex formula provides a volume-weighted, exponential moving average market price by blending trading data from the three largest Bitcoin Exchanges by volume on a list of Index Provider-approved Bitcoin Exchanges. > As of December 26, 2014, the eligible Bitcoin Exchanges include Bitfinex, BitStamp, BTC-e, CampBX and LocalBitcoins. Needless to say, if BTC-e is not one of the three largest BTC exchanges, then it won't be included. Assuming there's a way to verify every trade reported by BTC-e on the blockchain, shouldn't irregularities show up relatively quickly? More importantly, it seems that they do recognize that possibility: "Even in the absence of large trading fees and fiat currency deposit/withdrawal policies, price differentials across Bitcoin Exchanges remain; for example, bitcoins on BTC-e traded at a discount of approximately 0.9 percent relative to the average daily weighted price for bitcoins on BitStamp and Bitfinex during the week ended December 26, 2014. During the prior month, prices on BTC-e typically traded at a discount of between zero and five percent."
- ksherlock 12y ago
  Check the previous sentence: MtGox was included in the Winkdex right up until they went bankrupt.
- gnaritas 12y ago
  > Assuming there's a way to verify every trade reported by BTC-e on the blockchain Trading doesn't happen on the blockchain, it can't, block chain confirmations are far too slow for trading. All trading on all exchanges happens off chain.
- tyrfing 12y ago
  > Assuming there's a way to verify every trade reported by BTC-e on the blockchain There is no way to verify the veracity of trades on any of these exchanges. The only part that touches the blockchain is deposits and withdrawals, and those are extremely hard to track. I agree that including BTC-e on that list is a very odd decision, considering they have excluded OKCoin, Huobi, and other Chinese exchanges which make up the lion's share of the market (even ignoring the wash trading). BTC-e has a reputation of being something akin to Liberty Reserve, in that they exist primarily to enable drug dealers, thieves, and anyone else with dirty money to obtain fiat no questions asked.
late2part 12y ago
A lot of people based things on LIBOR and that is a mostly complete fraud. http://en.wikipedia.org/wiki/Libor_scandal http://en.wikipedia.org/wiki/Libor_scandal
murbard2 12y ago
Shouldn't matter so much: http://www.sec.gov/Archives/edgar/data/1579346/000119312514457552/d721187ds1a.htm#toc721187_16 http://www.sec.gov/Archives/edgar/data/1579346/0001193125144... Creation/Redemption means that if the price of the shares diverges from the true price of Bitcoin, you can convert Bitcoins into trust shares and vice-versa.

minimax 12y ago

This could be one of the reasons the SEC hasn't approved the ETF for sale to the public. The first S-1 for this ETF is dated 2013-07-01, so it's not like the SEC hasn't had time to look at it. That said, there is a whole universe of bizarro exchange traded products in the US equity market so who really knows. I don't think the feedback from the SEC to the Winklevoss brothers has been made public.

rockyleal 12y ago

That's just being consistent with the reality of the Bitcoin market. BTC-e, whatever its structure, is one of the main Bitcoin exchanges, and as such it is necessary that it is represented in the index, else the index would present a distorted picture of the real market.

sheetjs 12y ago

> that index includes BTC-e Not necessarily. All they say is: > The Index Provider’s Winkdex formula provides a volume-weighted, exponential moving average market price by blending trading data from the three largest Bitcoin Exchanges by volume on a list of Index Provider-approved Bitcoin Exchanges. > As of December 26, 2014, the eligible Bitcoin Exchanges include Bitfinex, BitStamp, BTC-e, CampBX and LocalBitcoins. Needless to say, if BTC-e is not one of the three largest BTC exchanges, then it won't be included. Assuming there's a way to verify every trade reported by BTC-e on the blockchain, shouldn't irregularities show up relatively quickly? More importantly, it seems that they do recognize that possibility: "Even in the absence of large trading fees and fiat currency deposit/withdrawal policies, price differentials across Bitcoin Exchanges remain; for example, bitcoins on BTC-e traded at a discount of approximately 0.9 percent relative to the average daily weighted price for bitcoins on BitStamp and Bitfinex during the week ended December 26, 2014. During the prior month, prices on BTC-e typically traded at a discount of between zero and five percent."

ksherlock 12y ago
Check the previous sentence: MtGox was included in the Winkdex right up until they went bankrupt.
gnaritas 12y ago
> Assuming there's a way to verify every trade reported by BTC-e on the blockchain Trading doesn't happen on the blockchain, it can't, block chain confirmations are far too slow for trading. All trading on all exchanges happens off chain.
tyrfing 12y ago
> Assuming there's a way to verify every trade reported by BTC-e on the blockchain There is no way to verify the veracity of trades on any of these exchanges. The only part that touches the blockchain is deposits and withdrawals, and those are extremely hard to track. I agree that including BTC-e on that list is a very odd decision, considering they have excluded OKCoin, Huobi, and other Chinese exchanges which make up the lion's share of the market (even ignoring the wash trading). BTC-e has a reputation of being something akin to Liberty Reserve, in that they exist primarily to enable drug dealers, thieves, and anyone else with dirty money to obtain fiat no questions asked.

late2part 12y ago

A lot of people based things on LIBOR and that is a mostly complete fraud. http://en.wikipedia.org/wiki/Libor_scandal http://en.wikipedia.org/wiki/Libor_scandal

murbard2 12y ago

Shouldn't matter so much: http://www.sec.gov/Archives/edgar/data/1579346/000119312514457552/d721187ds1a.htm#toc721187_16 http://www.sec.gov/Archives/edgar/data/1579346/0001193125144... Creation/Redemption means that if the price of the shares diverges from the true price of Bitcoin, you can convert Bitcoins into trust shares and vice-versa.