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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 might have elevated rates of fraud, and that investors may be solicited on social media websites.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 both issued investor alarms about bitcoin.177178
An official investigation into bitcoin dealers has been 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 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 motivated 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 initial delivery date in January 2018, the CME asked extensive detailed trading information however a few of those exchanges refused to supply it and later 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 price manipulation occurred during the Mt Gox bitcoin theft and the market remains vulnerable to manipulation.186 The history of hacks, fraud and theft involving bitcoin dates back to at least 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 at the Bitfinex exchange account for about half of the purchase price increase in bitcoin in late 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 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 their 2018 annual report. The criticisms include the lack of stability in bitcoin's cost, the high energy consumption, high and variable transactions costs, the poor security and fraud in cryptocurrency exchanges, vulnerability to debasement (from forking), and the influence of miners.191192193.
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The Economist wrote in 2015 that these criticisms are unfair, predominantly because the my latest blog post shady image may compel users to forget the capabilities of the blockchain technology, but also due to the fact that the volatility of bitcoin 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 go to my site and a fraud;198 and professor Nouriel Roubini of New York University called bitcoin the"mother of all bubbles. "199 Central bankers, including former Federal Reserve Chairman Alan Greenspan,200 investors such as Warren Buffett,201202 and George Soros203 have stated similar views, as have business executives such as 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 if all miners used modern facilities, the combined power consumption would be 166.7 megawatts (1.46 terawatt-hours per year).133
In 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 estimates of bitcoin's overall consumption levels amount to only about 6% of the total energy consumed by the international banking industry, and even if bitcoin's consumption levels increased 100 fold from the current degrees, bitcoin's consumption would still only amount to approximately 2% of international power consumption.206.
To reduce the costs, bitcoin miners have put up in places like Iceland where renewable energy is economical and cooling Arctic atmosphere is free.207 Bitcoin miners are known to use hydroelectric power in Tibet, Quebec, Washington (state), and Austria to decrease electricity prices.206208209210 Miners are drawn to suppliers like Hydro Quebec that have energy surpluses.211 According to a University of Cambridge study, a lot of bitcoin mining is done in China, where power has been subsidized this article by the government.212213.