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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 may be solicited on social networking sites.175 An earlier"Investor Alert" warned about the usage 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 possible price manipulation, including the techniques of spoofing and wash trades.180181182 Traders in the U.S., the U.K, South Korea, and possibly other countries are being investigated. Brett Redfearn, head of the U.S.
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The U.S. federal investigation was motivated by concerns of potential manipulation during futures settlement dates. The final settlement price of CME bitcoin futures contract is determined by costs on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the initial shipping date in January 2018, the CME asked extensive detailed trading information however a few of the exchanges refused to provide it and afterwards provided only limited information.
State and provincial securities authorities, coordinated through the North American Securities Administrators Association, are investigating"bitcoin scams" and ICOs in 40 jurisdictions.185
Academic research published in the Journal of Monetary Economics concluded that cost manipulation occurred during the Mt Gox bitcoin theft and that the marketplace remains vulnerable to manipulation.186 The background 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 related trading in the Bitfinex exchange account for roughly half of the price increase in bitcoin in late 2017.188189
J.L. van der Velde, CEO of Bitfinex and Tether, denied the claims of price manipulation:"Bitfinex nor Tether is, or has ever, engaged in any sort of market or cost manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex. "190
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The Bank for International Settlements outlined several criticisms of bitcoin in Chapter V of the 2018 annual report. The criticisms include the lack of equilibrium in bitcoin's cost, the high energy consumption, high and variable transactions costs, the poor security and fraud at cryptocurrency exchanges, vulnerability to debasement (from forking), and also the influence of miners.191192193.
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The Economist wrote in 2015 that these criticisms are unfair, predominantly since the shady image may compel users to overlook the capacities of the blockchain technology, but also on account of the fact that the volatility of bitcoin is changing in dig this time.194
Bitcoin and other cryptocurrencies have been identified as economic bubbles by 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 called 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 said 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 More hints if all miners used modern facilities, the combined power consumption would be 166.7 megawatts (1.46 terawatt-hours annually ).133
At the end of 2017, the worldwide bitcoin mining activity has been estimated to consume between one and four gigawatts of electricity.205 Politico noted that the even high-end quotes of bitcoin's total consumption levels amount to only about 6 percent of the entire energy consumed by the international banking industry, and even when bitcoin's consumption levels increased 100 fold from today's degrees, bitcoin's consumption would still only amount to about 2% of global power consumption.206.
To reduce the costs, bitcoin miners have set up in areas like Iceland where renewable energy is cheap and cooling Arctic air is liberated.207 Bitcoin miners are known to utilize hydroelectric power in Tibet, Quebec, Washington (state), and Austria to reduce electricity costs.206208209210 Miners are drawn to providers such as Hydro Quebec that have energy surpluses.211 According to a University of Cambridge study, much of bitcoin mining is done in China, where power has been subsidized by the government.212213.