Is Poloniex Manipulating the Price of BitShares
Twitter erupted with outrage this week
November 22, 2017 — Cryptocurrency exchange, Poloniex has been disabling BitShares wallets for outgoing transactions suspiciously when the BitShares price begins to rise. Twitter erupted with outrage this week, as Poloniex users and BitShares investors began calling the exchange out for their bizarre handling of BitShares.
This most recent tweetstorm is only the beginning of what is turning out to be an interesting story. Before we can dig through these allegations of price manipulation, we need to cover a little background information.
The disabling of BitShares wallets on Poloniex this week certainly has evoked anger, however these incidents have been going on for months. According to posts on the blockchain based social media site Steemit, these wallet issues go back at least five months.
Here is the notification Poloniex users received from the exchange when trying to access their BitShares.
“BTS is currently under maintenance or experiencing wallet/network issues. Deposits and withdrawals will remain disabled until a solution is found, which may require an update from the BTS team. Any updates must be tested and audited before enabling.”
Now here is where things get interesting. The BitShares team has publicly denied that there was any technical issue on their end.
Poloniex itself has not provided the community with any clarification as to what the “wallet/network issues” are. This lack of transparency has many investors concerned and is fueling speculation. Even more bizzare is that Poloniex has seemingly refused to cooperate or even respond to the BitShare’s DEV team regarding the issues.
This isn’t the first time Poloniex has had outages and problems. A CoinDesk article covered rumors circulating in July 2017 that Poloniex was insolvent.
“Rumors have been circulating about the possible insolvency of Poloniex prompting users of the Bitcoin exchange platform to share their own dissatisfaction with the platform and increasing frustration for the lack of timely customer support.”
The article also went on to highlight customer issues with outages as well as frustration over the company’s lack of transparency. One specific case involved a Reddit user who shared how his $15,000 was frozen for three weeks without hearing any word from Poloniex.
“I have tried contacting everyone I can find with any ties to Poloniex, each time I was met with no reply. $15,000 might not be a lot for some people, but for me, it’s the difference in being able to pay my bills. I have waited over 25 days with no reply to my ticket. Please help me by upvoting this so Poloniex will be forced to fix this for me. Thank you so much for all your help. Ticket #228146.”
Outages and issues plagued Poloniex over the summer and many customers migrated to other exchanges as a result. However, the question remains, are Poloniex’s “issues” ineptness or something more sinister?
Price Manipulation of BitShares
Exchanges often experience outages and maintenance however, the emerging correlation between outages and the price of BitShares is concerning. Could Poloniex be purposefully manipulating the price of BitShares for profit, or is there something deeper?
For those readers who are not familiar with BitShares, BitShares is a decentralized exchange platform. Traditional exchanges like Poloniex are centralized. This means that the company has control over your private keys.
In the world of cryptocurrency, private keys are literally the keys to the kingdom. Whoever controls the private keys controls the funds. Using a centralized exchange, you must rely on a third-party to secure your funds. This can be very problematic. Many investors have had their funds lost or stolen by centralized exchanges.
The most infamous investor loss was the Mt Gox Bitcoin exchange. In February of 2014, Mt Gox, the largest Bitcoin exchange at the time, abruptly suspended trading, filed for bankruptcy and announced 850,000 bitcoins, belonging to its customers, were missing.
BitShares is different. Decentralization gives BitShares robustness against failure. When a centralized exchange is compromised, millions of dollars and thousands of users are impacted all at once. In a decentralized system, any attack or failure impacts only a single user and their funds. Unlike a centralized exchange like Poloniex, the DEX gives users control over their private keys, meaning they have complete control over their assets.
The core currency for the BitShares platform is BitShares (BTS). BTS derives its value from the demand for BitShares services. BTS also acts as a form of collateral and helps ensure the liquidity of Market Pegged Assets. By purchasing BTS you are buying a stake in the success of the platform.
Could it be that exchanges like Poloniex feel threatened by BitShares and they want to suppress the platform by manipulating the core currency? This is pure speculation at this point, but the world is moving towards decentralization and that includes exchanges. BitShares is not only a competing exchange but it is a new approach to exchanges all together.
We cannot be sure what is going on at Poloniex until they make a clear statement to the public. Until they do, the speculation will continue…
