Rigged Financial Markets: Is Bitcoin Next After The Likes Of Precious Metals (Gold, Silver), Forex And Interest Rates History
A World Of Rigging – Banks Have Rigged The Likes Of Precious Metals (Gold, Silver) Along With Foreign Exchanges And Interest Rates – But Is Bitcoin Next up?
While traders, financial experts, and institutions have spent a good number of years complaining. A coalition of these has managed to levy a lawsuit against the banks, which took place in 2014, under the accusation last that banks were responsible for the artificial rigging the prices of Gold and Silver over approximately a decade-spanning 2004 and 2013.
According to a report provided by Reuters back in 2016, Deutsche Bank, along with financial misconduct, has also agreed to a legal settlement on account of violating US Antitrust laws.
Deutsche Bank AG has since agreed to pay approximately $60 million to settle a private anti-trust litigation by traders among other investors who accused the German bank of conspiring to manipulate gold prices at their expense” as Reuter’s reported back in 2016.
Highlighting in another report by Reuters later in the same year, banks have been working to systemically manipulate the market of precious metals, including silver –
“Investors accuses the likes of Deutsche Bank, HSBC as well as Scotiabank if abusing their power as three of the world’s largest silver bullion banks to dictate the price of silver through a secret, once a day meeting known as the ‘silver fix.’”
Deutsche Bank, along with paying the settlement costs related to violations of antitrust laws relating to fixing of gold prices. The company has since settled this in a similar way, but there was more trouble to come for the likes of these banking firms. It was discovered shortly thereafter that banks were becoming engrossed in an internal culture of interest rate rigging as well.
The effectively means that these banks have been working to unnaturally manipulate the underlying value of sovereign currencies, which worked to peak intrigue surrounding the new controversies further onward. Shortly after this discovery, news broke regarding the allegedly politically agnostic financial institution – The Bank of England.
“It has since emerged that the Bank of England’s senior foreign exchange-traded has been sacked amid an investigation into what the central bank knew about foreign exchange manipulation.”
The Bank of England’s outgoing Governor – Mark Carney stated that Martin Mallett had not been dismissed due to the Lord Grabiner Report, which served to single out Mallett for direct criticism in this controversy. But this sacking also related to other breaches of conduct and which emerged in this investigation.
The six banks, with the exception of the Bank of America, were fined a total of £1.1 billion by the British Financial Conduct Authority [FCA], and $1.5 billion [£933 million] by the United States Commodities and Futures Trading Commission (CFTC) as of yesterday morning. At the same time, the Swiss Financial Markets Supervisory Authority also announced a 134 million Swiss Franc (£88 million) fine on the UBS.
Additionally, yesterday afternoon, the United States office of the State Comptroller of the Currency announced a further $950 million in fines placed upon Citibank, JP Morgan, and the Bank of America.
In total, the fines reached a peak of £2.74 billion. The banks themselves were not fined for currency manipulation, but rather for failing to manage staff.
According to the multiple reports by Reuters, these fines are in accordance with what these banks have been proven guilty of doing so far, it the value of nearly any assets traded in the stock market of Walk Street is imposed by banks through what we know as price fixing.
Walking into the venue for the meeting that fixes the world good price at N M Rothschild feels like stepping into another age before the screens and computer systems used by most markets were invented.
On two of the five tables sit old fashioned hand dial telephones, although these are more for show rather than deliberate use.
Rothschild’s representative, the chairman, sits at the central table which is surrounded by the four other shareholders in the market. Once independent brokers, they now represent Deutsche Bank, the Bank of Nova Scotia, HSBC and Societe Generale.
The chairman declares the opening price. The fix is set when each shareholder has lowered his union flag, signifying that a balance is achieved between the various buyers and sellers.
The meetings usually take around 15 minutes, although during the 1987 stock market crash – the first meeting lasted more than two hours.
The way that this system works is that these bankers meet each twice daily, either . through in-person meetings as a group or by conference calls and strike up a conversation like that they have x amount in precious metals, sovereign currencies like Dollars or Pounds Sterling, commodities, etc before specifying the kind of price. The other banker would then take steps to either agree or disagree to this price, and whatever the final agreed price is what is agreed to as the underlying price of gold for jewelry sellers, converters of gold or silver to cash along with a vast array of other traders internationally.
There have been more than enough opportunities for the manipulation of prices through this kind of infrastructure and has been more than proven through the aforementioned cases above. Now, however, they claim that this is a system that has since undergone some drastic reforms, meaning that this entire system is put to work in an entirely online format.
Reform is certainly not the word that we'd use for this kind of rigging system. It's still the same clutch of individuals, shareholders, and investors from major banking outfits, and it is still the same underlying system of a few individuals setting the price for a vast array of assets and commodities across the world – effectively meaning that this group dictates the price for the whole. The only ‘reform' that's taken place is just how this small group does this.
The regulatory body for Securities and Exchanges within the United States – The Securities and Exchanges Commission (SEC) demanded that this be the same process established before the granting of an Exchange Traded Fund (ETF) for Bitcoin. This factor meant that the Winklevoss twins were required to establish the Gemini Auction, which goes on to declare the following:
“Market participants can place an auction-only market order (which will execute at the final auction price) or a limit order indicating the maximum buy price they are willing to pay, or minimum sell price they are willing to receive.
The Gemini Auction will match the aggregate buy and sell demands from all participating orders and determine the price (“cross-price”) at which the largest quantity can be filled.”
The Securities and Exchange Commission would go on to deny the Winklevoss Twins' application for an ETF regardless. This decision may, in fact, be because it isn't just the banks that can actively participate in this auction system. Or it may, in fact, be because there isn't as much of a captivated audience for this auction-style system within the Bitcoin world.
Rather than bankers being responsible for the trading of these various assets and commodities being conducted in a secretive boardroom or convert website, Bitcoin, being a virtual asset, is something that is traded ceaselessly on a 24 hour, 7 day a week basis. What's more, this is the case for the digital asset internationally, with hundreds if not thousands of small, medium and large-scale exchanges, consisting of millions of people responsible for their small parts in billions of auctions and transactions. As a result, these people are the interdictors of value within the system, not some covert cabal.
This makes the world of cryptocurrency exchange trading to be a far more different kind of animal when directly compared to the traditional marketplace for securities, which are conventionally only traded on one type of exchange, or a series of exchanges that open and close at different times. As a result, this makes commodities, securities, and tangible assets easier to manipulate, while cryptocurrencies are far harder to manipulate with the same kind of assured control.
It's this kind of elaborate and digitalized system means that no clutch of bankers will have the power to control the price of Bitcoin. This is mainly because these bankers are not the major players in the crypto trading world. These bankers do not have control of the price of Bitcoin, and no one has to effectively go through a banker or series of bankers in order to trade crypto.
What these bankers must concede to is the fact that Bitcoin and the vast range of cryptocurrencies have managed to create a brand new, decentralized financial system that bears an interesting resemblance to the old one in some instances, but it is, on a fundamental level, strikingly different.
While, for the inexperienced mind of the individual in the cryptocurrency world, not having to deal with a banking institution sounds like a pretty negligible victory. But it's important to note, alongside the previously mentioned cases of price rigging, four major banking names make up approximately $200 trillion worth of trading in various derivatives, meaning that these banks hold a cartel over an enormous market. Doesn't make Bitcoin seem too negligible now.
While this is a decentralized framework that makes up the foundation of cryptocurrency trading, there is still the likelihood of some level of price manipulation within the market. While this is still a possibility, it doesn't have such the kind of risks associated with it as we'd see from the mainstream world of trading.
If hypothetically, there was to be some kind of instance of price manipulation in the world of cryptocurrency trading, this would likely be a one-off instance, and not have the potential to lead to some long-lasting conspiracy to hike the price of precious metal over a span of years.
Blockchain technology and cryptocurrency present some serious challenges regarding the role of bankers in the world of trading. Especially in the accrediting of value, which is a responsibility that they've had for a long time, partly due to the old order requiring some kind of intermediary body in order to ensure its long-term stability.
this new, digitalized order has a new kind of intermediary in place which erodes any kind of need for bankers. The code has taken the place of this old system, and it dramatically disrupts banking as we previously knew it, cryptocurrencies are pulling power away from them, removing them as power over our finances.
Through the process of doing this over the past few years, it provides a trickling level of personal sovereignty to the people. For this moment in time, this is something that remains a theory that is steadily moving into reality. Taking this from theory to application will not be a perfect transition, but money that is mediated by a code-base and/or smart contract solution under millions of people means that there is no self-interested intermediary flexing their power within the relationship between the people and their money.