For a while now, I have been monitoring activity on Coinbase/GDAX, along with Bitfinex. I originally watched GDAX off and on during suspicious activity back in May, and have been recording GDAX activity along with Bitfinex for the past several months.
‘Picasso’ is a trading bot that I believe is painting the tape on Coinbase, this bot may in fact be working with, or is Spoofy, but because he’s using a different strategy, I decided to give him another name.
The name ‘Picasso’ is because he’s essentially, painting the charts for Bitcoin however he damn well pleases. This is why I believe TA is pointless with Bitcoin, and crypto-currencies in general.
Take note though, while this is a bot on Coinbase/GDAX, this does not necessarily mean the bot is being ran by Coinbase/GDAX.
I do believe this bot may be associated with, or may be Spoofy. Perhaps shifting his strategy after I exposed ‘Spoofy’.
What the hell is ‘Painting the tape’?
Painting the tape is an age old tactic by traders to artificially manipulate prices. Since I exposed the activity of Spoofy, spoofing has gone down considerably.
This is another method to manipulate prices that is usually a little harder to see from the outside.
Painting The Tape
A form of market manipulation whereby market players attempt to influence the price of a security by buying and/or…
Painting the tape is a form of market manipulation whereby market players attempt to influence the price of a security by buying and/or selling it among themselves so as to create the appearance of substantial trading activity in the security. Painting the tape is an illegal activity that is prohibited by the Securities and Exchange Commission because it creates an artificial price for a security. The term originated in a bygone era when stock prices were largely transmitted on a “ticker tape.”
I believe now I have enough evidence to make this assertion against the ‘Picasso’ bot on GDAX, be aware though that this bot is very likely, on every exchange and not just on Coinbase. Coinbase simply helped expose him.
Coinbase should investigate this activity, preferably with a notable firm that is familiar with investigating this kind of fraud and not an ‘internal’ investigation.
First, I’m going to start with this video.
This is activity from GDAX and Bitfinex from December 7th, 2017. Coinbase prices for Bitcoin went several thousands of dollars out of whack compared to the rest of the market.
The volume and price volatility in my opinion, is not from organic demand, but from a trading bot that hit an empty orderbook. I do not believe any humans placed buy orders for Bitcoins at $2000+ over Bitstamp/Bitfinex.
Since this event Coinbase has been several hundred, and sometimes thousands of dollars ahead without the other exchanges ever catching up to it.
Another important thing to note, the volume on Bitfinex plummets to practically zero when Coinbase went down, indicating this bot is ‘replaying’ or doing arbitrage for transactions from Coinbase, on Bitfinex.
I.e., Someone buys Bitcoin from Picasso on GDAX, Picasso then buys it back, at a massive discount on Bitfinex. No GDAX volume = No Bitfinex volume.
Why would someone be painting the tape on GDAX?
Traders working with Spoofy have a direct interest in ensuring that the prices on other exchanges, are always higher than Bitfinex.
This makes people more likely to try and jump through significant hoops to deposit to Bitfinex in order to pick up ‘cheap coinz’, which increases the amount of money allegedly going into Bitfinex.
This also allows this trader to make a killing running arbitrage between Coinbase/GDAX and Bitfinex.
Bitcoin Cash implementation spills Picasso’s painting supplies.
The ‘Picasso’ bot appears to be extremely aggressive in how it trades, this aggressiveness was fully exposed with Coinbase adding Bitcoin Cash to their exchange.
This bot, within minutes, drove the price of Bitcoin Cash to 200+% higher than the rest of the market, due to the order books being practically empty, only stopping with another giant ask wall (which also could have been the Picasso bot).
I believe that the reason we saw Bitcoin Cash start out trading like this, several hundred percent higher than the rest of the market, is because the tape painting bot was unleashed on this trading pair too early.
With empty orderbooks, within minutes it drove the price to as high as $9,500. It was so bad that Coinbase had to suspend trading, interestingly, they also suspended trading on December 7th, 2017 when this bot went wild as well, driving Bitcoin prices thousands of dollars ahead of the rest of the market.
Notice how there is a buy order for 95 Bitcoin Cash at $8500. No human being would have entered this order on GDAX. This was a tape painting bot specifically designed to inflate prices.
Coinbase should investigate the account which placed these buy orders, because in my opinion they were not bona-fide orders made by a trader but by a bot trying to manipulate prices, which is a violation of Coinbases Term’s of Service.
This bot has also caused them an extraordinary amount of PR damage and accusations of possible insider trading.
‘Picasso’, like ‘Spoofy’, is on multiple exchanges.
I watch trading activity religiously, and ever since August when I exposed ‘Spoofy’ there has been a dramatic drop in the amount of Spoofing activity. Prior to my ‘Spoofy’ expose, Spoofing happened daily.
I released an episode of roughly $14 million dollars of Spoof orders with audio of Phil Potter claiming it doesn’t happen, and magically, the amount of Spoofing has gone down dramatically.
Since then, I can count the blatant spoofs on one hand. One spoof at around $6,000 ($12 million spoof), one spoof at $5,7xx ($40 million spoof), and recently one spoof at $12,xxx (12 million spoof).
So, I believe since I exposed the spoofing, they simply switched strategy with something that is harder to detect.
Unfortunately for them, Coinbase accidentally exposed Picasso. I urge Coinbase to investigate this trader.
I believe this same trader was spoofing on Coinbase, as well. The beauty of recording all trading activity is I can go back and see the state of the orderbook at any time in almost the past year. Something you don’t get with charts.
With regards to this trading bot, I do not want to imply that Coinbase/GDAX is running it.
But I do believe this bot may be related to Spoofy and in theory it could be operated by someone working with Bitfinex.