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The U.S. Securities and Exchange Commission has also issued warnings. A May 2014"Investor Alert" warned that investments involving bitcoin may have elevated rates of fraud, and that investors might be solicited on social media sites.175 An earlier"Investor Alert" warned about the use of bitcoin in Ponzi schemes.176
The self-regulatory organization FINRA and the North American Securities Administrators Association have issued investor alarms about bitcoin.177178
An official investigation into bitcoin traders was reported in May 2018. The U.S. Justice Department launched an investigation into potential price manipulation, including the techniques of spoofing and scrub transactions.180181182 Dealers in the U.S., the U.K, South Korea, and maybe other countries are being investigated. Brett Redfearn, head of the U.S.
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The U.S. national investigation was prompted by concerns of possible manipulation during futures settlement dates. The final settlement price of CME bitcoin futures is determined by costs on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the first delivery date in January 2018, the CME requested extensive detailed trading information however several of those exchanges refused to provide it and afterwards provided only limited data.
State and provincial securities authorities, coordinated through the North American Securities Administrators Association, are investigating"bitcoin scams" and ICOs in 40 jurisdictions.185
Academic study published in the Journal of Monetary Economics concluded that cost manipulation occurred during the Mt Gox bitcoin theft and that the market remains vulnerable to manipulation.186 The history of hacks, fraud and theft involving bitcoin dates back to 2011.187
Research by John M. Griffin and Amin Shams in 2018 suggests that trading associated with increases in the amount of the Tether cryptocurrency and associated trading at the Bitfinex exchange account for about half of the price increase in bitcoin in overdue 2017.188189
J.L. van der Velde, CEO of both Bitfinex and Tether, denied that the claims of price manipulation:"Bitfinex nor Tether is, or has , engaged in any kind of market or price manipulation. Tether issuances cannot be used to prop up the amount of bitcoin or any other coin/token on Bitfinex. "190
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The Bank for International Settlements summarized several criticisms of bitcoin in Chapter V of their 2018 annual report. The criticisms include the absence of stability in bitcoin's price, the high energy consumption, high and variable transactions costs, the poor security and fraud at cryptocurrency exchanges, vulnerability to debasement (from forking), and the influence of miners.191192193.
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The Economist wrote in 2015 these criticisms are unfair, predominantly since the shady image may induce users to overlook the capabilities of their blockchain technology, but also due to the fact that the volatility of bitcoin special info is changing in time.194
Bitcoin and other cryptocurrencies have been identified as economic bubbles by at least eight Nobel Memorial Prize in Economic Sciences laureates, including Robert Shiller,195 Joseph Stiglitz,196 and Richard Thaler.19713 Noted Keyensian economist Paul Krugman wrote in his New York Times column criticizing bitcoin, calling it a bubble and a fraud;198 and professor Nouriel Roubini of New York University known as bitcoin that the"mother of all bubbles. "199 Central bankers, including former Federal Reserve Chairman Alan Greenspan,200 investors like Warren Buffett,201202 and George Soros203 have stated similar views, as have business executives like Jamie Dimon and Jack Ma.204.
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Bitcoin has been criticized for the amount of electricity consumed by mining. As of 2015update, The Economist estimated that even though all miners utilized modern amenities, the combined electricity consumption would be 166.7 megawatts (1.46 terawatt-hours per year).133
In the end of 2017, the worldwide bitcoin mining activity was estimated to consume between one and four gigawatts of power.205 Politico noted that the even high-end estimates of bitcoin's overall consumption levels amount to only about 6 percent of the total power consumed anchor by the international banking sector, and even when bitcoin's consumption levels increased 100 fold from today's levels, bitcoin's consumption would still only amount to about 2% of international power consumption.206.
To reduce the costs, bitcoin miners have set up in areas like Iceland where renewable energy is cheap and cooling Arctic atmosphere is free.207 Bitcoin miners are known to utilize hydroelectric power in Tibet, Quebec, Washington (state), and Austria to decrease electricity prices.206208209210 Miners are attracted to providers like Hydro Quebec who have energy surpluses.211 According to a University of Cambridge study, a lot of bitcoin mining is done in China, where electricity has been subsidized by the government.212213.