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Many other exchanges have been known to do wash trading to manipulate prices in the past. When Bittrexx announced their delisting of privacy coins, attempts to withdraw those coins took much longer than usual.
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(But selling into a transparent coin like ETH, and withdrawing those, was immediate.) This has led to suspicions that they didn't actually hold those coins, they were operating on fractional reserves.
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The bigger question here is whether exchanges are not only running on fractional reserves, but are overselling coins that don't exist, to drive the price of some coins down. More transparency in exchange operations would go a long way to putting those questions to rest.
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No, we wouldn't provide such an API. If you want to know whether an exchange is fractional, you would have to do a full audit. Why would an exchange take the risk of a naked short on a coin just to drive the price down? If you're worried about that, trade on regulated venues.
Funny how even in regulated markets, naked shorts are a thing.
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Replying to @DavidWestin @GameStop and 2 others
As of December 31 investors had shorted 138% of the float. Why was the discussion limited to regulating retail investors that identified an opportunity vs the funds that sold naked shorts creating the environment where it was possible?
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