Author Topic: Money/inflation, the Fed, Banking, Monetary Policy, Dollar, BTC, crypto, Gold  (Read 512937 times)


ya

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Then what is GBTC?

GBTC is considered a Trust. For example, they dont allow withdrawals at all times. However, there is a very high probability it is in the process of being converted into an ETF, it might become the largest ETF because of their massive BTC holdings.

Below is a chart model predicting 300 K for the top. Scroll to the right.


Crafty_Dog

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Thank you YA.

DougMacG

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Lawrence Summers: stimulus plan will result in a major inflation crisis
« Reply #1354 on: April 11, 2021, 04:31:44 PM »
Looking at the $2 Trillion "infrastructure" bill from a [former] Treasury Secretary's perspective:

Larry Summers, right, called Democrats' $1.9 trillion relief package "the least responsible macroeconomic policy we've had in the last 40 years"

Former Obama economic adviser Larry Summers continues to blast the Biden administration’s stimulus plan and warns it will result in a major inflation crisis.

https://nypost.com/2021/03/29/obamas-economic-adviser-blasts-bidens-stimulus-plan-says-it-could-trigger-high-inflation/

DougMacG

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Monetary Policy, Fed Chair Jay Powell on CBS pushes Intentional Inflation
« Reply #1355 on: April 11, 2021, 08:21:06 PM »
https://www.msn.com/en-us/money/markets/powell-tells-60-minutes-that-us-economy-is-at-an-inflection-point/ar-BB1fxKsa
https://www.detroitnews.com/story/news/nation/2021/04/11/fed-jerome-powell-economy-boom-ahead-covid-risk/7184515002/
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I found this interview creepy.  Jay Powell on 60 Minutes. This is what our Fed Chair thinks and he has enormous power.

Fed Chair Jay Powell wants inflation to be over 2% per year to make up for the time it was too low.  He wants inflation to average at least 2%.

Has anyone ever heard of the power of compounding interest?  In a time of mostly low inflation, a median price home went up 1500% in 60 years.  You don't get that with 2 + 2 + 2.

How does the Federal Reserve and US Government benefit from intentional inflation?
1. It devalues the debt.
2. Nothing raises tax burden like taxing inflationary gains.  The legislation he refers to removes "stepped up value at death", which is proof that not only the inflation is intentional, but the tax on inflation is by design as well.  It's a feature, not a bug.

Powell says the economy is ready to take off.  We could have 6-7% growth or more [because last years' numbers were depressed by covid].  Powell 's reasons include the vaccine, meaning things can reopen.  He says the fiscal policy [spending stimulus] is supporting the recovery, and monetary policy will as well. 

On the fiscal side, Powell shows his stripes.  Keynes is dead.  When did demand side stimulus work?  The Great Depression that went on and on was the start of it. How about shovel ready jobs?  Cash for clunkers?  Their story is it always failed because the stimulus wasn't big enough, so now we have this one - and the Fed Chair likes it.  The other part of the fiscal policy in the bill is tax rate increases on businesses.  That supports the recovery?? 

Powell should know, the difference between putting one time money in people's pockets and the supply side approach is as simple as handing a man a fish versus teaching him to fish.  Supply side stimulus eases the disincentives and removes barriers to production.  That's why we had real employment and wage growth before covid.  This bill, Jay Powell is touting, reverses what was working great. 

Raising taxes on businesses isn't a stimulus.  Why are they trying to do that?  To pay for the spending?  It doesn't pay for the spending, and it will bring in less than promised because businesses don't take higher tax rates sitting down.  Businesses adapt.  They figure the higher tax into every financial decision, including where to locate, where to re-locate, where to expand, where to hire, where to close up shop and where to show a profit. 

Fed Chair Powell is promising The Fed will support the recovery [with expansionary policies, near zero interest rates] "until the recovery complete."  Even if you liked the approach, isn't that too long to artificially propping things up?  What goes wrong on the other side of that? 

Powell will save the contractionary monetary policies for next [Republican] President.

Powell's demonstrates how business cycles are a choice made by policy makers.  The ups and downs make them more important and in control.  But the economy doesn't need that/  We have the stimulus we need.  We have the vaccine and we need to open the economy.  Why put artificial stimulus on top of what is already working?  Why binge and why bring on the inevitable hangover?  It makes no sense.
« Last Edit: April 11, 2021, 09:01:30 PM by DougMacG »

ya

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Check out this read on Hyperbitcoinization. The author has written a decent book on BTC

https://www.citadel21.com/hyperbitcoinization

ccp

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Jay Powell
« Reply #1357 on: April 12, 2021, 04:37:26 AM »
Wikipedia on Jay Powell:

**********
As Fed chair, Powell has been seen as a consensus-builder and problem-solver, rather than as advocate of a strong point of view on monetary matters. He has kept in close contact with Capitol Hill for next steps.[6]

Powell won bipartisan praise for the actions taken by the Fed in early 2020 to combat the financial effects of the COVID‑19 pandemic.[7] As the Fed continued to apply high levels of monetary stimulus to further raise asset prices and support growth, some observers perceived a disconnect between asset prices and the economy.[8][9][10] Powell has responded by arguing that supporting the Fed's dual mandate of stable prices and full employment outweighed concern over high asset prices and inequality.[11]

Time said the scale and manner of Powell's actions had "changed the Fed forever"[12] and shared concerns that he had conditioned Wall Street to unsustainable levels of monetary stimulus to artificially support high asset prices.[9] Politicians responded positively to his aggressive response to the crisis, with President Trump calling him the "most improved player" in his administration in August 2020 and Janet Yellen praising his "very thoughtful and methodical" approach.[13]

*********
His approach seems to jive with the Left's "scam" [my word] of going big on spending , and to justify the  soaring debt , the wild spending through the roof.

He kept Trump happy (who did not seem to mind all the spending - since it kept the market up)
   Now he keeps the Dems happy who want to enhance and make permanent their agenda and power.

Wonder if racial reparations will be stuffed into the "elderly" bill
or the next one somehow with another disingenuous label .
 
   




ccp

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With regard to Ya's post about bitcoin analogy of being a "lifeboat"

I can envision being on a lifeboat

owner of a treasure in bitcoin

but riding it in a storm in the middle of the ocean

Agreed though , that is better then going down on the Titanic


ccp

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ccp

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ccp

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ex Fed prosecutor

on CNBC as I type this in on board of CoinBase

is now without a doubt the happiest richest ex prosecutor in the country today :

https://www.cnbc.com/2019/10/06/meet-the-former-prosecutor-who-became-the-face-of-crypto-vc-investing.html

with a straight face during her CNBC interview
    "I was impressed with Coinbase management's commitment to regulatory law."

so she quit being a prosecutor and become a VC crypto fund manager and sit on Coinbase board

and get rich

nothing swampy to see here folks

move along






ya

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Good time to buy...SOPR indicator discussed before.


ccp

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One of the most sound investments I have ever seen
« Reply #1365 on: April 19, 2021, 07:52:46 AM »
https://www.coindesk.com/price/dogecoin

since 1/20 it is only up 175 times

reddit ponzi pyramid
  deluxe

ccp

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DougMacG

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Re: WTF was that?
« Reply #1367 on: April 19, 2021, 10:10:14 AM »
https://www.zerohedge.com/markets/bitcoin-crashes-much-15-amid-unsubstantiated-report-money-laundering-crackdown?utm_campaign=&utm_content=Zerohedge%3A+The+Durden+Dispatch&utm_medium=email&utm_source=zh_newsletter

The point has been made that the US government (and other governments) cannot stop Bitcoin.  But rest assured, they will try.  The US government, especially under Leftist, want a cashless society to eliminate all transactions they don't have complete tracking control over.  To the extent that bitcoin is a currency at least partly out of the tracking control of the IRS, our all-powerful government will fight forever to shut it down or at least shut our access to it down.

If 15% is the big drop on bad news of an investment based 100% on speculation, I would take that as a sign of strength.

1 Bitcoin = US$55k at this writing.

Crafty_Dog

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GBTC down 9% today right now, breaking the 50 day line.

ccp

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correction:

on my reply post 1365. on dogecoin chart I meant the chart from inception not today

it goes nearly vertical


Crafty_Dog

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COIN
« Reply #1370 on: April 19, 2021, 11:22:29 AM »

ccp

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Crafty ,

your getting like Ya :))
what does this chart mean?

in "charts for idiots" terms?


Crafty_Dog

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It mean it has been trading for three days and today still within the range of where it traded on Day One, albeit with a distinctly lower media price.

Crafty_Dog

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Grannis on the Stunning Divergence
« Reply #1373 on: April 20, 2021, 06:54:39 AM »
https://www.zerohedge.com/markets/stunning-divergence-latest-bank-data-reveals-something-terminally-broken-financial-system?utm_campaign=&utm_content=Zerohedge%3A+The+Durden+Dispatch&utm_medium=email&utm_source=zh_newsletter

Scott Grannis comments:

I would say that this has been a problem all along. The market distortions caused monetary inflation are widespread. A rise in the narrow measures of consumer price inflation is not the only thing that is problematic.

On Mon, Apr 19, 2021 at 8:00 PM <sfgrannis@me.com> wrote:
This information has been known for quite some time. There has been a huge expansion of bank deposits (savings and checking) that is roughly equal to the amount of QE by the Fed, which in turn is roughly equal to the money Treasury borrowed to send out Covid checks, etc.

In effect, the banks loaned money to the Fed, instead of the usual way (loaning to individuals). In exchange, the banks received bank reserves from the Fed, which are functionally equivalent to T-bills.

This will become problematic if and when those holding all the new deposits (the public in general) decide that they don’t want to hold all that money in an account paying virtually zero interest. Attempts to make net withdrawals, if not matched by Fed actions to reverse its QE, will result in a rise in the general price level (ie inflation).

I expect we’ll begin seeing evidence of such in coming months.

DougMacG

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Re: Grannis on the Stunning Divergence
« Reply #1374 on: April 20, 2021, 09:06:13 AM »
Thanks for posting this.  It's not surprising to see strange occurrences in the economy and the monetary system in the year of covid and the reaction and over-reaction to it.  We spend n extra $6 trillion (?) not covered in taxes or borrowings, close and shrink the private sector, and put out all kinds of disincentives to do anything.

Quoting Scott G: "In effect, the banks loaned money to the Fed, instead of the usual way (loaning to individuals). In exchange, the banks received bank reserves from the Fed, which are functionally equivalent to T-bills.  This will become problematic if and when those holding all the new deposits (the public in general) decide that they don’t want to hold all that money in an account paying virtually zero interest. Attempts to make net withdrawals, if not matched by Fed actions to reverse its QE, will result in a rise in the general price level (ie inflation)."

   - And we call this good governance?  Besides screwing everything else up, this is inflation by design, by choice.  They call it modern monetary theory; It's more like treason.

Crafty_Dog

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Stratfor: The Basics of Money Laundering
« Reply #1375 on: April 21, 2021, 11:04:18 AM »

The Basics of Money Laundering: How Criminal Organizations Move Illicit Revenue Into the Legal Economy

undefined and Global Security Analyst
Ben West
Global Security Analyst, Stratfor
8 MIN READApr 21, 2021 | 09:00 GMT






(Shutterstock)

Editor's Note: Organized criminal activity is endemic to much of the world. Whether in the form of drug trafficking, fraudulent activity or scams, no market is immune from the threat. And wherever there is organized criminal activity, there are illicit funds making their way into the financial system. While banks and financial institutions have borne the brunt of penalties related to money laundering activities, criminals use a variety of legitimate business activities to conceal the source and destination of illicit funds. Understanding how money laundering works and popular tactics can help legitimate business operations avoid becoming vehicles for the laundering of criminal proceeds. In the first of this two-part series, we will review the basics of money laundering operations. We will then examine recent case studies and consider the future of the problem in part two.
 
Both legitimate and illegitimate business activities generate revenue distributed to employees, organizational leaders, investors and outside vendors that provide essential services. Any legitimate business owner will be familiar with the collection and distribution of funds through standard commercial bank accounts and investment vehicles. Criminal organizations have the same concerns, but for them, the process of collecting and distributing revenue is fraught with legal challenges. In most countries, a drug cartel cannot simply open a bank account under its own name, deposit proceeds from cocaine sales, and redistribute the funds to various leaders, employees and vendors. Not only would the bank report such obvious criminal activity, but the official transaction records left behind would allow investigators to identify and arrest the entire criminal network. Instead, criminal groups have to rely on obfuscation to manage their financial resources and move them around. As evidenced by numerous investigations and penalties levied against major international banks in recent years, many criminal organizations use the same financial institutions as legitimate businesses when it comes to managing their money. With increased scrutiny on illicit financial activities, criminal groups have had to rely on more sophisticated money laundering operations to evade detection.
 
The share of the global economy that is laundered is significant. The U.N. Office on Drugs and Crime estimates that criminal groups launder the equivalent of somewhere between $800 billion and $2 trillion in illicit funds per year. That is the equivalent of 2-5% of global gross domestic product. But money laundering is not just a tool for criminal organizations seeking to conceal the source of their illicit funds: Groups or individuals engaged in legitimate business activity may launder their revenue in order to evade taxes. States can also engage in money laundering, whether North Korea seeking to repatriate funds from financially motivated cyberattacks or Iran seeking to evade U.S.-led sanctions on its economy.

The Three Stages of the Money Laundering Process
Money laundering can come in a variety of shapes and forms, but there are generally three phases of the process:

Placement is the deposit of illicit assets (typically cash) into a financial network where the funds can be more easily stored and transferred. While some money laundering schemes skip the placement stage and simply keep the assets in cash, storing and moving large amounts of cash presents multiple liabilities to criminal actors. Large amounts of cash can be stolen, destroyed or, if discovered by law enforcement, used as evidence against the criminal actors. Just as it is impractical for legitimate business operations to store their revenue in cash, criminal organizations also seek to store their revenue in easier to manage, more secure, bank accounts, financial instruments or other assets like real estate, precious metals or fine art.

Layering is the process of obscuring the source of the funds and where the funds ultimately end up. It can be as crude as making multiple transfers from various accounts to more sophisticated money laundering schemes that convert the funds into various instruments, from cash to physical assets and back to cash, for example. This process is meant to prevent investigators from being able to connect the illicit activity to its financial benefactors, or at least to raise enough confusion so as to avoid legal liability.

Integration is the final step that converts the illicit funds into legitimate goods and services. Once the origin of the funds has been sufficiently concealed, the receiver can use them to purchase properties or luxury items or invest them in financial products indistinguishable from goods and services purchased with legally earned funds. Prosecutions linked to money laundering typically involve the forfeiture of such goods and services.

A flowchart showing the Three Stages of the Money Laundering Process

Tactics

To achieve these steps, money laundering schemes rely on a variety of tactics. Although criminal networks are constantly developing new ones, the five highlighted below represent some of the most commonly used tactics. While not every money laundering scheme progresses cleanly through the three steps outlined above — for instance, some achieve integration in a single step, while others focus on concealing funds in the placement phase — they broadly adhere to the placement-layering-integration model:

Illicit Currency Exchanges are unregistered, black market money exchanges that are integral in the placement and layering phases of the money laundering process. These money exchanges can convert illicit funds into foreign currencies and use informal networks to move funds to foreign countries where anti-money laundering regulations are laxer. At a minimum, these exchanges can move dirty money outside of the jurisdiction where the original crime was committed. Doing so can complicate investigations by typically requiring foreign assistance that is often difficult to coordinate even among allies with robust law enforcement capabilities, let alone rival countries that lack the political desire to cooperate.

Structuring/Smurfing is also a tactic predominantly associated with the placement step of a money laundering scheme. Most countries have limits on cash deposits and when individuals exceed those limits, financial institutions are required to file a Suspicious Action Report, which can lead to further investigation. In the United States, that amount is $10,000. Money laundering schemes that involve illicit funds in excess of $10,000 often try to get around the limit by breaking up (or "smurfing," named after the miniature cartoon characters) the total into smaller amounts below the $10,000 limit. Less sophisticated schemes will involve the same person making deposits of $9,999 into the same account over consecutive days, while more sophisticated schemes will break up the amount into various sizes distributed across various accounts associated with various identities at various financial institutions over a broad geographic area.

Front Companies/Fraudulent Invoices allow money launderers to complete the placement and layering steps of the money laundering process simultaneously by disguising illicit funds as legitimate funds. The fraudulent invoice tactic is typically used in conjunction with a front company that can record thousands or millions of dollars in sales for legitimate products when the revenue is actually coming from illicit activities. Unsophisticated front companies that use fraudulent invoices are fairly easy to detect through basic auditing or due diligence practices, as they can lose significant amounts of money in the business they claim to be operating in.

The bar, restaurant and hospitality sector is popular for local money laundering operations due to high cash turnover. Given the risks associated with money laundering, criminal organizations are typically willing to accept some loss in order to secure their illicit revenue, but they will have an upper limit to their loss tolerance. More sophisticated front companies, for example, in the import/export or construction businesses, can turn into legitimate revenue-generating operations in their own right, allowing criminal actors to operate in the illicit and legitimate economies.

Shell Companies/Offshore Accounts allow individuals to separate their identity from their assets to avoid legal scrutiny during the integration step of the money laundering process by using special legal instruments and establishing financial channels to foreign jurisdictions. The 2016 leak of over 11 million documents known as the Panama Papers outlined how unscrupulous wealth management companies helped wealthy individuals and organizations avoid legal and financial obligations in their home country by putting accounts under different names and changing other key details to distance individuals from their wealth while still maintaining control over it. Such tactics are used both by individuals who earned their wealth legitimately but seek to decrease tax burdens or political pressure and individuals who obtained their wealth illegally and seek to secure it.

Trade-Based Money Laundering is a strategy that involves the placement, layering and integration steps of the money laundering process. It is especially attractive to foreign-based criminal organizations seeking to repatriate their money from the markets where they earn it — most notably, the United States. In this scheme, criminal organizations use illicit revenue to purchase durable goods such as cars, refrigerators, washing machines, etc. (placement) and export them to their home country. They then sell the items on the local market (layering) and collect the converted revenue, which has the appearance of coming from a legitimate import operation and therefore distracts from the integration phase of the process. This scheme is especially attractive because it can offer criminal organizations a way to earn money off their illicit funds by selling the legitimate products at a markup.

ya

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The BTC level at 53 K is important, thats the 1 Trillion market cap. Strong support here. BTW, I am not selling.

« Last Edit: April 22, 2021, 04:19:27 AM by ya »

ccp

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ether at all time highs

may run more than bitcoin at this point
for the near term

ya

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Yes, money usually flows from large cap (BTC) to Ether to small caps..who may take profits and buy BTC. All of this can change quickly if BTC shoots up.

Crafty_Dog

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GBTC and COIN looking very weak.

Crafty_Dog

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WSJ
« Reply #1380 on: April 23, 2021, 03:37:44 AM »
A sudden weekend drop in the price of bitcoin suggests the digital currency’s yearlong rally might finally be running out of steam.

Bitcoin fell as much as 17% on Saturday to $52,149, with about half the decline occurring in about 20 minutes late in the evening Eastern Time. Although it recovered some of those losses by Monday morning, the price has steadily declined this week. It was trading at $51,843 late Thursday.

Bitcoin topped out at $64,829 on April 14, the same day Coinbase Global Inc., COIN -5.92% the biggest U.S. cryptocurrency exchange, went public in a highly anticipated offering. The two events marked the pinnacle of a heady rally for cryptocurrencies that began last year. Bitcoin’s price more than tripled in 2020 and doubled to start 2021 before slipping.

Yet that momentum lately has been showing signs of flagging, said Michael Oliver of the research firm Momentum Structural Analysis. Since bitcoin crossed $60,000 in March for the first time, its pace of gains has slowed and it has traded in a relatively narrow range. That was a sign, he said, that the rally could falter, as it finally did over the weekend.

“We think bitcoin’s broken for the time being,” he said, pointing to technical trend lines.

The dramatic weekend crash underscored the fragility of bitcoin’s recent advance. It is unclear what triggered the selloff, which according to the data provider CoinMarketCap wiped out nearly $220 billion of value in cryptocurrencies in an hour.

Some traders pointed to a rumor on Twitter that the Treasury Department was preparing to charge several financial institutions for allegedly using cryptocurrencies to launder money, which was picked up by some media outlets. A department spokeswoman declined to comment.

Whatever sparked the initial bout of selling, traders agree that it accelerated because of the implosion of enormous amounts of leveraged bets that investors had placed on overseas, lightly regulated cryptocurrency-derivatives exchanges.

SHARE YOUR THOUGHTS
What do you predict the future looks like for bitcoin? Join the conversation below.

In all, traders lost $10.1 billion on Sunday to liquidations by crypto exchanges, according to the data provider Bybt. More than 90% of the funds liquidated that day came from bullish bets on bitcoin or other digital currencies, Bybt data show, and nearly $5 billion of the liquidations took place on one exchange, Binance, the world’s biggest crypto exchange by trading volume.

As the price of bitcoin tumbled, many of those bets were automatically liquidated, adding more downward pressure on the price and leading to a vicious cycle of further liquidations.

Some crypto traders were wiped out with little warning.

Jasim, an engineer in Kuwait who declined to give his last name, said he was awakened by an alert on his phone at about 5 a.m. local time Sunday. He watched anxiously as Binance liquidated some of his trades, and then he closed out others with steep losses. In all, he said he lost about $9,000.

It wasn’t a new experience for Jasim, whose positions have been liquidated several times since he got into crypto in 2017. “Being greedy is the problem,” he said. Jasim has resumed trading but plans to be more careful about risk management in the future.

Exchanges such as Binance let individual investors deposit a relatively small amount of money upfront to place an outsize bet. For instance, suppose a trader buys futures that pay off if bitcoin rises against the U.S. dollar. If bitcoin climbs, the trader’s profit could be many times greater than what could have been made simply by buying bitcoin.

But if bitcoin falls, the trader can be on the hook for big losses, and must quickly top off the account with fresh funds, or else the exchange will automatically liquidate the trader’s holdings.


“You have potential for a series of cascading liquidations, happening back to back to back,” said Chris Zuehlke, global head of Cumberland, the crypto-trading unit of Chicago-based DRW Holdings LLC.

Adding to the weekend’s chaos, some exchanges, including Binance, reported glitches in the midst of heavy trading volumes. Traders said their inability to access exchanges dried up liquidity—which was already thin over the weekend—and exacerbated price moves. A Binance spokesman said, “In instances where we may have experienced outages, we aim to learn from them to prevent further occurrence.”

Offshore crypto-derivatives exchanges offer individual investors high degrees of leverage. At Binance, for instance, investors can get leverage of 125 to 1 for some futures contracts, meaning they can deposit just 80 cents to amass the equivalent of $100 of bitcoin. By comparison, an investor trading bitcoin futures on CME Group Inc., a regulated U.S. exchange, would need to deposit at least $38 and would likely be required to post more margin by their brokerage.

What Coinbase’s Public Debut Means for Bitcoin and Crypto
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What Coinbase’s Public Debut Means for Bitcoin and Crypto
What Coinbase’s Public Debut Means for Bitcoin and Crypto
The listing of Coinbase, the largest bitcoin exchange in the U.S., introduces a new way to invest in cryptocurrencies. WSJ explains how Coinbase is trying to distance itself from the risks of bitcoin to succeed on Wall Street. Photo illustration: George Downs
The Binance spokesman said that the exchange recently reduced the amount of leverage it offers on many products and that only a few users were using 125-to-1 leverage.

Still, traders said the swiftness of the weekend selloff underscores the role of heavily leveraged bets—many of them by individual investors—in fueling this year’s cryptocurrency rally.


“At its core, bitcoin is still heavily driven by retail, who choose to use a lot of leverage,” said Rich Rosenblum, president of the crypto-trading firm GSR.

Among other signs of bitcoin’s flagging momentum: signs of waning demand among institutional investors and the tepid performance of Coinbase since its debut last week.

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The number of large bitcoin transactions, which are typically made by professional money managers, dropped slightly in the first quarter from the fourth quarter, according to a report from the crypto exchange OKEx. And assets held under management by the industry’s fund providers fell 4.5% to $56 billion in April from March, according to the research firm CryptoCompare.

While Coinbase’s debut was a flag-planting event for the industry, it might have also been a cue for investors to take some profits. The company was the first major crypto firm to test public markets in the U.S. and fetched a monster valuation of $85 billion on its first day of trading. But its shares have fallen in six of its seven sessions as a public company, closing Thursday at $293.45, down from its opening price of $381 on April 14.

Bitcoin peaked the same day.

ccp

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goin down for now
« Reply #1381 on: April 23, 2021, 06:55:53 AM »


Crafty_Dog

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Money Laundering part two
« Reply #1383 on: April 28, 2021, 05:15:38 AM »
ON SECURITY
The Basics of Money Laundering: Case Studies
12 MIN READApr 28, 2021 | 09:00 GMT
Stratfor


Editor's Note: The following is part two of a two-part series on money laundering; part one may be accessed here. Part one detailed how money launderers use a variety of tactics to place, layer and integrate illicit funds into the formal economy. In the process, they invariably intersect with legitimate companies and services, ultimately seeking to obfuscate the origin of illicit funds by converting them into legal assets such as cars, properties and investments. Part two will outline recent case studies that illustrate how money launderers use their tactics in real-world situations. It will also explore how technology could change money laundering in the near future and how regulators could expand beyond the financial sector when it comes to penalizing companies for facilitating money laundering operations.

Case Studies

To illustrate how criminals use the tactics and schemes highlighted in part one of this series, the following section will review some recent money laundering cases. Criminal charges related to money laundering are typically associated with charges linked to the criminal activity that earned the illicit revenue such as fraud, theft or drug trafficking. Details of the cases laid out below suggest that authorities first became aware of the illegal activity, which then led them to evidence that supported additional charges related to money laundering. The nature of the charges highlights how money laundering can be difficult to detect on its own, especially in sophisticated cases. Money laundering operations can operate separately from the criminal activity that generates the illicit funds so that a money laundering tactic used for one type of criminal activity (e.g., drug trafficking) could also be applied to another, unrelated type of criminal activity (such as online fraud).

The first case highlights how an amateur money laundering operation facilitates a criminal investigation and allows prosecutors to directly connect illicit funds to the purchase of goods and services. In spring 2020, federal investigators arrested and charged Fahad Shah for making fraudulent applications to the Paycheck Protection Program Congress established to help businesses following the outbreak of the COVID-19 pandemic. As part of the alleged fraud, Shah grossly inflated his company's payroll in order to receive over $3 million in loans. He deposited the illicit funds into his business account (placement), skipped the layering step and proceeded directly to the integration step by purchasing a Tesla, paying off his personal mortgage and making personal investments. Based on the details provided, it is unlikely that Shah was even attempting to launder the money, but his use of illicitly acquired funds made him liable to the charges.

Since 2019, there have been at least three major anti-money laundering (AML) law enforcement actions targeting online scammers. The arrests and indictments of dozens of individuals underscore the growing focus on internet-based cybercrime that has only increased over the past year during the COVID-19 pandemic. With illicit revenue comes the need for money laundering, and cybercriminal groups have proved capable of establishing sophisticated schemes in the recent past.

In August 2019, U.S. federal investigators indicted 80 members of a Nigeria-based cybercriminal group that laundered at least $6 million in illicit funds. Two U.S.-based members of the group established dozens of front companies with associated bank accounts and business registrations — often imitating the names of legitimate businesses in an effort to trick victims. The victims completed the placement stage by transferring funds requested during the scam. The group then layered the illicit funds by transferring them to illicit money exchangers who arranged for payments to the Nigeria-based organizers in the local currency. The actors carrying out the scams and benefitting from the illicit funds presumably remain at large in Nigeria and are free to continue their operations and recruit more money laundering associates abroad.

In March 2020, federal investigators charged and arrested 24 individuals for carrying out similar online scams as outlined above that earned the group upward of $30 million by compromising online accounts and convincing individual and commercial victims to transfer up to hundreds of thousands of dollars at a time. The group used less sophisticated money laundering processes, however, making it easier for investigators to shut down the entire criminal operation rather than just the money laundering aspect. The group set up front companies in the U.S. state of Georgia and established bank accounts associated with those companies to facilitate placement of the funds. Unlike the operation above, the group skipped the layering process and simply withdrew the illicit proceeds from the fraudulent business accounts in order to integrate the funds into the formal economy. The more direct connection between the placement and integration steps of the scheme likely helped investigators capture the whole group and dismantle the entire operation.

A February 2021 indictment accused six members of a cybercriminal group of laundering and transferring $55 million in illicit funds they stole through business email compromise and fraudulent applications for COVID-19 financial relief to organizers in Ghana from 2013-2020. In addition to establishing dozens of bank accounts to handle the placement of illicit funds, the suspects also established at least nine import/export front companies that layered the funds through trade-based money laundering. The suspects used the illicit funds to purchase items such as vehicles or food products, which they then exported to Ghana via the import/export companies they had established. Once in Ghana, local co-conspirators sold the products on the local market and directed the proceeds to the criminal organizers based there for integration. The more sophisticated efforts to layer the illicit funds could explain why this group operated longer and turned over more illicit revenue than the previous two groups despite their having conducted similar online criminal activities. While police were able to arrest the six suspects based in the United States, the criminal organizers in Ghana presumably remain at large.

One of the most sophisticated money laundering operations in recent years became public in a September 2020 indictment accusing five people of laundering millions of dollars in illicit drug revenue since 2008 from the United States to Mexico via China in an elaborate trade-based money laundering operation. This scheme added an extra step in the layering process by using illicit funds to purchase goods in the United States and export them to China, where local co-conspirators used proceeds from those sales to purchase additional goods for export to Mexico and other countries in Latin America. The money launderers then sold the products in Latin America to legitimate businesses at a profit and transferred the proceeds of the sale to the drug-trafficking leaders. While this particular operation serviced illicit revenue from drug sales, similar money laundering structures could handle illicit funds from other criminal activities.

Such a money laundering operation is complicated, but this one succeeded judging from the fact that the suspects were able to carry out the scheme for 12 years. In addition to being operationally secure by disguising the money laundering operation as a legitimate trans-Pacific import/export business, it provided several other advantages:

By distributing the money laundering scheme in the United States and China, it contained the damage done from the arrests in the United States. Even though those members were taken out of the operation, which likely led to disruptions, the Chinese and Latin American nodes of the network likely remain intact.

As a major global producer, China maintains sizable trade relationships with countries around the world, making it easier to conceal illicit activity within the larger stream of legitimate trade. The United States and China conducted $558 billion in trade in 2019 while Mexico and China conducted $90 billion.

Finally, the scheme turned a profit by selling the products converted from illicit funds at a markup. Money laundering operations generally result in a net loss due to the costs associated with obfuscating sources of illicit revenue and moving funds around.

New Technology

The proliferation of new technology has benefited criminals, creating entirely new fields of financially motivated crime that allow them to exploit email and social media and scam victims on the other side of the world. Money launderers have also exploited new tools such as money-transferring applications, encrypted communication platforms and cryptocurrencies to hide and move illicit funds. Like legitimate users of the technologies, criminals use the new tools because they are convenient, cheap and widely adopted throughout the world. Additionally, money laundering operations benefit from the higher degree of anonymity such platforms provide, which supports plausible deniability in case of law enforcement scrutiny.

New technology, however, also presents liabilities for criminals. Reliance on private companies for communications and money transfers means that investigators can access records through warrants presented to the host companies.
Cryptocurrencies that operate on blockchain technology (such as Bitcoin) are also open to scrutiny since transaction amounts and account numbers are essentially public information. Finally, the centralization of activities and information on personal electronic devices means that if investigators are able to seize a smartphone, tablet or laptop, they can typically gain access to a trove of valuable evidence and intelligence they can use to shut down larger criminal operations.

Person to Person (P2P) money transfer platforms such as Zelle, Venmo and Cash App are tools criminals can use against their victims to transfer money in the first place, facilitating the placement stage. They have gained popularity during the pandemic and their newfound acceptance is likely to persist. Additionally, P2P money transfer platforms assist money launderers in the layering process because they can move the funds across multiple accounts, obfuscating the destination of the funds and complicating investigation efforts.

An April 2021 indictment accused a Detroit-area drug trafficker of using Zelle and Venmo to transfer and conceal illicit funds.

Encrypted communication services such as WhatsApp, Telegram and other custom services allow criminals and money launderers to communicate among themselves and coordinate financial activities.

In August 2020, U.S. law enforcement agencies dismantled an al Qaeda-led money laundering operation that used WhatsApp to reach out to followers and solicit Bitcoin donations to support terrorist networks in Syria.

In March 2021, a federal grand jury returned an indictment against the chief executive officer of Canada-based Sky Global, a company investigators accuse of providing customized, encrypted electronic devices specifically designed to allow criminals to evade law enforcement detection. The indictment alleges that Sky Global facilitated the distribution of heroin, cocaine and methamphetamine to markets around the world and laundered illicit funds from those markets to the criminal organizers. Among the services Sky Global allegedly provided was the ability to remotely delete communications or other files that could be used as evidence of the illegal activities.

Cryptocurrencies such as Bitcoin help anonymize financial assets and make them easily transferable worldwide, facilitating an increase from approximately $1 billion in laundered money in 2018 to $2.8 billion in 2019, according to Chainanalysis. Cryptocurrencies are immensely helpful to money launderers in the placement and layering steps of the money laundering process, but vulnerabilities remain.
Chainanalysis also claims 55% of criminal cryptocurrency activity was concentrated in a small subset of 270 blockchain addresses, meaning that investigators could disrupt a majority of cryptocurrency activity by focusing on a relatively small batch of bad actor accounts.

The nature of cryptocurrencies and the blockchain technology that underpins them means that transactions and transfers are carefully documented and in most cases viewable by the public. While cryptocurrency accounts can be anonymized, they still have distinct identities linked to the individual(s) using them to conduct criminal activity. Online criminal marketplaces that sell drugs and other illicit products through the mail often rely on cryptocurrency transactions, but the steady pace of law enforcement disruptions of those marketplaces and associated arrests highlights their weak operational security. Moreover, cryptocurrency exchanges — which facilitate the purchase and sale of currencies — are under increasing scrutiny, as they serve as the bridge between virtual currencies and traditional financial markets.

In January 2021, a California man pleaded guilty to exchanging the equivalent of $13 million in Bitcoin without registering his financial activities. He was arrested after he agreed to facilitate the sale of Bitcoin for over $80,000 in cash for an undercover law enforcement officer posing as a money laundering agent for an international drug trafficking organization.

The vulnerabilities associated with new technologies mean that money launderers are unlikely to abandon more traditional money laundering tactics anytime soon. Instead, it is more likely that criminals will incorporate the new technologies into the more tried-and-true techniques. Criminals can use these technologies to augment traditional money laundering schemes, either by reducing the operating costs of front companies (and reducing losses) by making them online only; using the sale of online services to facilitate trade-based money laundering operations; and increasingly incorporating cryptocurrencies into the placement and layering stages in order to increase the obfuscation of illicit funds over various channels. As in the case studies above, money laundering operations are most successful when they link several techniques together, so adding new technologies into the mix provides more tools to obfuscate the origin and destination of illicit funds.

Threats to Business Operations

As crackdowns on the financial sector make it harder to launder money through banking institutions, criminals increasingly could target companies in other sectors for their money laundering operations. National authorities seeking to crack down on money laundering and other financial crimes penalized companies $10.4 billion in 2020 for various infractions, up from $8.14 billion in 2019, according to Fenergo. While these penalties focus almost exclusively on banks and financial institutions, any private company facilitating money laundering is potentially liable.

Understanding how money laundering schemes work and the variety of criminals involved in them can help legitimate business ventures avoid the associated risks. Whether relying on bank accounts to receive fraudulently acquired government loans, impersonating legitimate companies to conduct scams, or selling products purchased with illicit funds in legitimate retail outlets, money launderers rely on the formal economy. A recent threat assessment of organized crime in the European Union noted that 80% of criminal networks in the European Union use legal business structures to carry out their activities, including money laundering.

Trade-based money laundering, which has been shown to specifically involve attempts to launder illicit funds through the trade of legitimate commercial and retail goods, could see criminal finances and those behind them mix with legitimate businesses — posing risks to reputations and risks of legal liability.


ccp

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G M

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The coming hyperinflation
« Reply #1386 on: May 01, 2021, 02:16:14 PM »

ccp

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ccp

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inflation already in full force
« Reply #1389 on: May 03, 2021, 10:11:40 AM »
Do I dare say

Jimmy Earl Biden

Georgetown alums would appreciate or remember this:

Q: What did the Key Bridge and Jimmy Carter have in common ?
A:  both go in and out of Rosalyn.

DougMacG

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Re: inflation already in full force
« Reply #1390 on: May 03, 2021, 12:14:57 PM »
Do I dare say

Jimmy Earl Biden

Georgetown alums would appreciate or remember this:

Q: What did the Key Bridge and Jimmy Carter have in common ?
A:  both go in and out of Rosalyn.

Jimmy Carter would be skewered today by the Democrat Party - for being Christian.

In conversation with a family member Biden supporter, in response to mention of the current $6 trillion spending [in addition to the 16% increase in 'ordinary' spending], the point came up, 'Have you had a pandemic like this in your lifetime'?  No.  But the economic damage is mostly from the shutdowns, not the virus.  The economic answer is to re-open, not pay people for doing nothing most of whose incomes went up or were unaffected.  The economic effects were VASTLY different in red states mostly open versus blue states mostly closed, making the payments to address that political.

The giant infusion $6 trillion is a political tool or weapon, not "infrastructure nor a cure or remedy for a virus.  It does almost nothing to repair the damage done.  The spending is NOT paid for, nor even borrowed from anyone in particular.  How is it not inflationary, more dollars chasing fewer goods is the definition.  Question back (to younger Biden supporter), have you had inflation that was economically crippling in your lifetime?   We have.  Young people could not buy a house.  Businesses could not plan ahead.  Governments could basically not govern.  Everything was SPIRALING out of control.  We had a Price Wage Freeze [Fascism] from a Republican administration.  We were forced off the gold standard.  Inflation doubled in the decade following the price wage freeze.  Not such a good policy after all.  We had a crippling recession when the tight money policies were finally enacted to squeeze the inflation out.  People really did lose jobs and poverty and unemployment increased dramatically.

If the 1970s is too long ago to count, look at Venezuela right now. What's the difference between what they did wrong to get there and what we're doing now?  Nothing.  "That can't happen here."  Yes.  That's EXACTLY what they said.


ccp

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so what did your family member say after that?

if it was any of my biden supporting members they would frown
  blow me off
  come back with well Trump ballooned the deficit too......!

and not give one inch while still trying to take 3

ccp

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DougMacG

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Re: Newt : inflation = taxation
« Reply #1393 on: May 04, 2021, 07:10:11 AM »
https://www.gingrich360.com/2021/05/03/bidens-hidden-tax-increase/

He's right but it's even worse than that.  $300 trillion in assets go up in nominal value by inflation alone every year and the government double taxes someone on that "gain".  No moral hazard there?   https://en.wikipedia.org/wiki/Financial_position_of_the_United_States

$30 trillion in national debt devalued every minute, intentionally, by the borrower.  At some point lenders will demand debt be issued in a better currency - like they do right for every third world country that does that.  https://usdebtclock.org/

DougMacG

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Money, Monetary Policy, Dollar, Lumber inflation
« Reply #1394 on: May 04, 2021, 09:21:55 AM »
Builders say lumber prices have tripled.  You see that a 2x4 costs this and a sheet of plywood cost that but I've been looking for numbers to quantify it overall.  A senior trader at the world's largest privately held company told me lumber (wholesale) went from $400 per thousand board feet to $1100, just short of tripling.  Another source says it went from $350 to $1200, more than tripling.  This link shows commodity lumber now at over $1600 per 1000 bd. ft: https://markets.businessinsider.com/commodities/lumber-price?op=1

That's not inflation?  More dollars chasing fewer goods, with government policies pushing or pulling on both sides of it, in something as essential as housing?  Then what is?
« Last Edit: May 04, 2021, 09:28:43 AM by DougMacG »

ccp

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Hi Doug,

I don't know if you noted near the bottom

in the Wikepedia link
*Paul Krugman* is quoted or mentioned

ugghhhhhh!

DougMacG

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From yesterday,
ccp:  "so what did your family member say after that?"


The format here allows me to finish my thought carefully in paragraphs.  A contentious discussion allows maybe the first half of a sentence.  The reaction is defensive, both sides lock in when challenged, then quick insistence to not talk politics leaving all issues unresolved.

ccp

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". The reaction is defensive, both sides lock in when challenged, then quick insistence to not talk politics leaving all issues unresolved."

well I guess no point letting this spoil a meal:

https://www.youtube.com/watch?v=zO2zYTTI35w

or if between spouses even more .......... 



Crafty_Dog

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Ethereum and
« Reply #1399 on: May 11, 2021, 10:38:07 AM »
second

https://www.zerohedge.com/crypto/ethereum-soars-above-4100-nears-market-cap-jpmorgan?utm_campaign=&utm_content=Zerohedge%3A+The+Durden+Dispatch&utm_medium=email&utm_source=zh_newsletter

including this interesting datum:

As we detailed earlier, cryptocurrencies crossed a key threshold in the last week, surpassing the value of all physical US dollars in circulation...
« Last Edit: May 11, 2021, 10:41:54 AM by Crafty_Dog »