{"id":102814,"date":"2021-09-13T14:40:00","date_gmt":"2021-09-13T18:40:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=102814"},"modified":"2023-02-10T13:32:35","modified_gmt":"2023-02-10T18:32:35","slug":"return-of-the-fake-press-release","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/return-of-the-fake-press-release\/","title":{"rendered":"Return of the Fake Press Release"},"content":{"rendered":"\n<p>This morning I received an important news alert \u2013 Walmart (WMT) was pairing up in a venture with Litecoin to allow WMT customers the option of paying for purchases in Litecoin.&nbsp; That would be very newsworthy indeed.&nbsp; If a huge bricks and mortar retailer that is actively boosting its online presence was making a step into cryptocurrencies it would seem to validate notions about crypto\u2019s viability.&nbsp; But the story was quickly quashed by WMT. &nbsp;The logical assumption is that someone planted this story to give a lift to the price of Litecoin and other cryptocurrencies.&nbsp; If so, this story joins a long history of fake financial news that was designed to influence prices on behalf on nefarious traders.<\/p>\n\n\n\n<p>Looking at the intraday chart of Litecoin below, it is clear that someone had the opportunity to profit handsomely from the fake story.&nbsp; We have included the price of bitcoin on the graph, since it is a reasonable proxy for cryptocurrency sentiment as a whole.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-intraday-chart-of-litecoin-white-and-bitcoin-blue-september-13-2021\"><strong>Intraday Chart of Litecoin (white) and Bitcoin (blue), September 13, 2021<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"477\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/09\/Litecoin-intraday-1100x477.png\" alt=\"Intraday Chart of Litecoin (white) and Bitcoin (blue), September 13, 2021\" class=\"wp-image-102858 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/09\/Litecoin-intraday-1100x477.png 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/09\/Litecoin-intraday-700x303.png 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/09\/Litecoin-intraday-300x130.png 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/09\/Litecoin-intraday-768x333.png 768w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/09\/Litecoin-intraday-1536x665.png 1536w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/09\/Litecoin-intraday.png 1918w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/477;\" \/><\/figure>\n\n\n\n<p><em>Source: Bloomberg<\/em><\/p>\n\n\n\n<p>It is fairly easy to see from the graph exactly when the story broke and was subsequently squelched.&nbsp; Someone who played the ruse perfectly could have reaped a 30% round-trip profit in a matter of minutes.&nbsp; It would be ill-gotten gains, of course, but the incentive is obvious.<\/p>\n\n\n\n<p>Those of us who have been involved in markets are no stranger to fake financial stories.&nbsp; There probably have been fake stories designed to influence prices for as long as people have gathered in a forum to trade goods.&nbsp; <a href=\"https:\/\/www.afr.com\/technology\/fake-news-has-a-long-history-in-finance-20161219-gtds17\">This article<\/a> details a case from the early 1800\u2019s.&nbsp; <a href=\"https:\/\/www.socaltech.com\/articles\/fake-press-releases-what-have-we-learned-in-the-past-twelve-years-\/a-00218.html\">One of the most notorious cases<\/a> arose as the tech bubble was bursting.&nbsp; A fake profit warning from Emulex, a high-flyer at the time, sent shares plunging about 60%, only to have them rebound when the story was debunked.&nbsp; A short seller could have profited handsomely.&nbsp; The litany of fake financial news is so long that we can\u2019t fully recap it here.&nbsp; The Securities and Exchange Commission (SEC) <a href=\"https:\/\/www.latimes.com\/business\/la-fi-sec-fake-news-20170705-story.html\">catches some of the wrongdoers<\/a>, but many slip through the cracks.&nbsp; If a crime is lucrative enough, people will try to commit it, unfortunately.<\/p>\n\n\n\n<p>As many of you know, I was an options market maker for many years, and we were acutely affected when stocks would have outsized moves \u2013 especially if there was some sort of illegal trading involved.&nbsp; I know first-hand how costly this can be, and spent a great deal of time helping exchanges\u2019 regulatory divisions track down offenders.&nbsp; I only wish that we caught more and were fully reimbursed.<\/p>\n\n\n\n<p>So now it is clear that cryptocurrency has joined the fray.&nbsp; It\u2019s to be expected, I suppose, and certainly na\u00efve if one thinks that there aren\u2019t scads of self-interested folks on social media doing their best to pump and dump various cryptos.&nbsp; But the more interesting wrinkle is that a feature of the crypto space is that it exists in a sort of regulatory limbo.&nbsp; It is under-regulated compared to other financial assets because existing securities regulation doesn\u2019t quite cover cryptos.&nbsp; At least not yet, if SEC Chair Gensler has his way.&nbsp;<\/p>\n\n\n\n<p>Many crypto investors and traders enjoy the paucity of regulation in their sphere of influence.&nbsp; If that\u2019s the case, they\u2019d better get used to ever more sophisticated schemes to separate them from their investments.&nbsp; It\u2019s a feature, not a bug, when regulation is lax.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This morning I received an important news alert \u2013 Walmart (WMT) was pairing up in a venture with Litecoin to allow WMT customers the option of paying for purchases in Litecoin. But the story was quickly quashed by WMT.  <\/p>\n","protected":false},"author":4,"featured_media":84879,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[14700,6,19,8,9,22,26,3],"tags":[410,10311,312],"contributors-categories":[13576],"class_list":{"0":"post-102814","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ibkr-market-insights","8":"category-north-america","9":"category-options","10":"category-region","11":"category-securities","12":"category-stocks","13":"category-text-articles","14":"category-traders-insight","15":"tag-bitcoin","16":"tag-litecoin","17":"tag-walmart","18":"contributors-categories-interactive-brokers"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast 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Prior to joining Interactive Brokers, Sosnick held senior trading roles at Morgan Stanley, Lehman Brothers, and Salomon Brothers, where he completed the firm\u2019s famed training program.","sameAs":["https:\/\/ibkr.com"],"url":"https:\/\/www.interactivebrokers.com\/campus\/author\/steve-sosnick\/"}]}},"jetpack_featured_media_url":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/04\/crypto-up.jpg","_links":{"self":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/posts\/102814","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/comments?post=102814"}],"version-history":[{"count":0,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/posts\/102814\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/media\/84879"}],"wp:attachment":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/media?parent=102814"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/categories?post=102814"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/tags?post=102814"},{"taxonomy":"contributors-categories","embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/contributors-categories?post=102814"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}