Hedge Funds might be using Crypto (BTC) as a washing machine for their dark pool shorted shares
===============================================================================================

| Author      | Source | 
|  :----:     |    :----:   |        
| [u/Both_Maintenance_206](https://www.reddit.com/user/Both_Maintenance_206/) | [Reddit](https://www.reddit.com/r/Superstonk/comments/mu2l9y/hedge_funds_might_be_using_crypto_btc_as_a/) |

---

[Possible DD 👨‍🔬](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22Possible%20DD%20%F0%9F%91%A8%E2%80%8D%F0%9F%94%AC%22&restrict_sr=1)

DISCLAIMER

*This is no financial advise! I am not an experienced monkey. I just do like the colors and the crayon stick figures. Maybe I'm gonna grab me some and munch on them. I don't want you to set your expectations because of that post.* *Even consider this to be wrong!*

[nomnomnomn](https://preview.redd.it/pg4k36rbk6u61.png?width=225&format=png&auto=webp&s=db6c1ee240b2896634c484a0e0658178c2a454a8)

*Please feel free to correct me and to leave some feedback!*

*You're allowed to keep spelling mistakes for youself.*

*This is only a thesis. I don't have hard proof for the practice. I just interpreted the charts and tried to input my knowledge about crypto. Also, I'm a bit lazy. If you like to look up some more, I would like to be part of your findings.*

*I don't know if someone already mentioned it or at least looked it up. If someone can dig even deeper into that, we might be a step closer to generate clear evidence for shady HF tactics.*

EDIT

This ~~is~~ was being downvoted like crazy. It might be a rabbithole. (TINFOIL) This might be the reason why crypto and BTC is forbidden at [r/wallstreetbets](https://www.reddit.com/r/wallstreetbets/), should they have been invaded. i tried to post it there, it has already been deleted even though I replaced BTC/Crypto. (/TINFOIL) The Tinfoil might have been [debunked](https://www.reddit.com/r/Superstonk/comments/mu2l9y/hedge_funds_might_be_using_crypto_btc_as_a/gv3t098/?utm_source=reddit&utm_medium=web2x&context=3) (although the provided link doesn't work). The Correlation can be traced down to about a year ago in my interpretation.

FOREWORD

I would've liked to change the title, as I don't mean Bitcoin alone. It can be any cryptocurrency, from BTC, to Dash, XMR, ZEC, DOGE, any other coin that might fit into THEIR system.

Some comments state I would not understand blockchain technology. I am in crypto currencies since 2012. It is true, that any bitcoin transaction can be identified. The ones using and sending those transactions cannot be directly identified through the blockchain though! Thats the purpose of bitcoin (and blockchain alltogether): creating trust between anonymus parties via distributed ledger and consensus. There have to be laws at the endpoints of crypto, to avoid money laundering. Up until today, there are nations where even fait money is not regulated to a anti money laundering (AML) degree (panama papers for example)... Furthermore, they can easily use or develop own mixing services (read down below at 3.1). I repeat:

If there was no need to draft anti money laundering laws regarding the use of cryptocurrencies, why should worldwide nations from europoor countries to the USA, China, India even think about it?

Keep in mind, that it's not just somebody that might be laundering. If bigger institutions are in control of the market, whom should they be obliged to identify themselves to?

Crypto might just be one of many layers being used for a systemic laundering.

Offshore accounts, OTC markets, dark pools, gambling sites, mixing services, nations with poor legislation regarding moneylaundering (panama, malta, etc. pp.) are all just parts of a bigger puzzle. Anything that interrupts the trace before is a catalyst for a systematic laundering.

Citing "Evaluating cryptocurrency laundering as a complex socio-technical system: A systematic literature review" by [Dennis B. Desmond, ](https://www.emerald.com/insight/search?q=Dennis%20B.%20Desmond)[David Lacey, ](https://www.emerald.com/insight/search?q=David%20Lacey)[Paul Salmon](https://www.emerald.com/insight/search?q=Paul%20Salmon) conclusion:

> By applying Rasmussen's core tenets to cryptolaundering, we have demonstrated that the laundering of cryptocurrencies is a complex socio-technical system and as such for requires a systems approach when attempting to understand it. In applying a safety and security protocol overlay to the cryptolaundering process, control of work processes may be evaluated to identify the most effective and secure laundering process for perpetrators to avoid failure, investment loss or arrest. It is therefore, concluded that future research examining cryptolaundering processes and systems should adopt a systems thinking approach. Further applications of systems thinking theories and methods in this context are therefore recommended.

Guess who is controlling most of the markets... it's up to you.

Furthermore, Citadel seems to be [very popular](https://www.top10-casinosites.net/citadel-instant-banking/) for money transfers to online casinos (which do partly also accept cryptos).

TABLE OF CONTENTS

1.  TL:DR

2.  Introduction

3.  The Washing Machine

    1.  The Crypto Space

    2.  Correlation between Crypto and GME(related Stocks)

4.  Conclusion

5.  Update Section

6.  Sources

1\. TL:DR

HF are buying GME (and maybe other shorted stocks like AMC) in dark pools. When dropping those shares into the retail market, they make money, because they are STILL SHORTING THOSE STOCKS. Their short positions generate money. The won money might be put into crypto for finishing washsales. Scroll down for the last (5th) picture. There you can see it clearly.

For how they make money with deep ITM calls, go check out this AI backed DD:

<https://www.reddit.com/r/Superstonk/comments/mvdgf5/the_naked_shorting_scam_in_numbers_ai_detection/?utm_source=share&utm_medium=ios_app&utm_name=iossmf>

This might be (at least one) reason, why the HF keep shorting!

Remember: the shorted shares have still to be covered! Buying at dark pools seems to only (maybe) reset their FTD timer, but doesn't close their shorted positions.

2\. INTRODUCTION

I assume you all read all big DDs like the Chaos, Everything, etc. pp. ones! Also read up [u/brockm's DD regarding crypto being misused!](https://www.reddit.com/r/Superstonk/comments/mteyvy/bitcoin_and_possibly_all_crypto_has_potentially/)

2.1. I guess most of you have seen this one here: [Sells through the major exchanges, buys through the FADF - a dark pool](https://www.reddit.com/r/Superstonk/comments/mpebkz/sells_through_the_major_exchanges_buys_through/?utm_source=share&utm_medium=web2x&context=3). It is a screen recorded video, which shows that the FADF (a so called [dark pool](https://www.investopedia.com/articles/markets/050614/introduction-dark-pools.asp)) is being used, to buy (non existend or borrowed) shares. The FADF buys don't affect the price at NASDAQ. In the meanwhile, the bought shares are being dropped on retail exchanges, thereby dropping the price (artificial price dropping and pressure to keep the price low). Why are they doing it? Of course, we got the max pain. The hedgies try to keep the chart below. And furthermore: they are still shorting GME (the whole reason for the MOASS) [GME Short Interest at 160 minimum](https://www.reddit.com/r/Superstonk/comments/mq4jl6/gme_short_interest_at_160_minimum/).

Of course you have learned, if a stock is being shorted, they earn money when its price drops. Therefore they are winning money. Problem is, using dark pools is only allowed to a certain degree, because of the [underlying intransparency](https://www.sec.gov/news/statement/shedding-light-on-dark-pools.html) for retail traders.

2.2. Conjencture 1: HF make more money with dark pool shorted shares than they are allowed to and therefore mix money into crypto to save those earnings.

Conjencture 2: HF wash money they have won by shorting shares and put it into crypto.

Conjencture 3: Yes, 1 and 2 are nearly the same.

3\. THE WASHING MACHINE

3.1. - The Crypto Space

How can crypto be used as a washing machine? I [answered that question](https://www.reddit.com/r/Superstonk/comments/mu2l9y/hedge_funds_might_be_using_crypto_btc_as_a/gv39gy2/?utm_source=reddit&utm_medium=web2x&context=3) by a critical asking ape. The main way of laundering via crypto is by using [crypto mixing services](https://ngm.com.au/bitcoin-laundering/). They might theoretically be able to push their own version of block into the chain, if they have [enough mining power](https://bitcoinmagazine.com/business/bitmain-nears-51-network-hash-rate-why-matters-and-why-it-doesnt) (regarding BTC) and thereby don't even need an exchange. But I guess this would go too far. The other thing is, there are also CRYPTO DARK POOLS [1](https://www.investopedia.com/news/number-dark-pools-cryptocurrency-trading-increasing/) [2](https://support.kraken.com/hc/en-us/articles/360001391906-Introducing-the-Kraken-Dark-Pool) [3](https://academy.binance.com/en/articles/a-simple-introduction-to-dark-pools)!

Ongoing, you can see how money can be laundered using crypto in the following figures [1](https://www.emerald.com/insight/content/doi/10.1108/JMLC-10-2018-0063/full/html#sec014):

[Cryptocurrency money laundering process, adapted from Gilmour (2014); Möser (2013); Fanusie and Robinson (2018)](https://preview.redd.it/9oj2b4yikbu61.png?width=1161&format=png&auto=webp&s=da0a28a97ac521d8fd814429ffaa26b9c7539943)

[High cash money laundering process, from Gilmour (2014)](https://preview.redd.it/4r6m0jvpkbu61.png?width=1145&format=png&auto=webp&s=caa5c4bbc22e3e850cba5321478db426113038ff)

Furthermore, there is a sociotechnical aspect to cryptolaundering.

[Cryptolaundering socio-technical system involved in risk management after Rasmussen (1997)](https://preview.redd.it/ptw5tnozkbu61.png?width=1300&format=png&auto=webp&s=afc84c3a966871498bdf04578e5e88d235330063)

3.1.1. Now keep in mind that HF are not the only ones creating traffic on BTC. Thereby it won't be a 100% coordinated chart. But there seems to be a close relation to the traffic of the ETF Shorted shares to Bitcoin. Don't forget DOGE trading being halted by Robin Hood when it rose like crazy last week... Also think about that there are more than one crypto currency. They might use DOGE to hedge positions from BTC or other coins - RIGHT NOW. Look at the chart below.

[Cryptocurrency market caps changes in percent, 1 Month: Blue = BTC, Yellow = Ether, turqoise = XRP, Purple = DOGE.](https://preview.redd.it/0s5w95ls06u61.png?width=3018&format=png&auto=webp&s=f606452be7a25dcf3834f9f4d70a59588933b0ea)

Excursion: From my point of view, the DOGE rise is a examplary [pump & dump scheme](https://bravenewcoin.com/insights/how-to-identify-a-crypto-pump-and-dump-scheme). Those groups, which coordinated early by buys the P&D and [releasing amazing news](https://www.coindesk.com/robinhood-crypto-withdrawals-deposits). Look at the timing and the rise of the DOGE market cap.

[DOGE Market Cap, 3 Month. Starting around 28th January, the market cap of Doge started to pump. There was no reason for it to pump. If you have read up the link about \"how to spot a crypto p&d\", you will notice, that DOGE is a examplary set up P&D.](https://preview.redd.it/sd4fkihy36u61.png?width=3018&format=png&auto=webp&s=b13491fa87c966902f0c8f811a45cf9f10c1fdfc)

And guess who [hired former CFTC Chair](https://www.complianceweek.com/grapevine/ex-cftc-chair-heath-tarbert-joins-citadel-as-chief-legal-officer/30222.article), who seems to know a lot about crypto [1](https://www.coindesk.com/tarbert-steps-down-cftc) [2](https://www.cftc.gov/PressRoom/SpeechesTestimony/tarbertstatement032420a). If you want, you can watch [Houston Wades talk](https://www.youtube.com/watch?v=skvMJGPYjUg) about dark pools, dogecoin etc.

3.1.2. [It might also not be related to GME only](https://www.reddit.com/r/Superstonk/comments/mu2l9y/hedge_funds_might_be_using_crypto_btc_as_a/gv38nbz/?utm_source=reddit&utm_medium=web2x&context=3). There will be connection to a higher degree index I guess. Also lets not forget that Hedge Fonds might be hedging their positions. Crypto might be one of these.

3.2. - Correlation between Crypto and GME(-related stocks)

When overlaying BTC and GME charts, you can see a relation:

[GME - 15 min Chart down to 4/09](https://preview.redd.it/t6oi258a55u61.png?width=3018&format=png&auto=webp&s=dd9afcf16c39a49f17eb674ca21fd9033bb65591)

[BTC - 15 min Chart down to 4/09](https://preview.redd.it/wm3uwgsub5u61.png?width=3018&format=png&auto=webp&s=ab7f0e5488d4352a2dde6ba5cd5c7b88f05c7c40)

If you look closely for the afterhour from friday, 16th, and premarket from today monday, 19th, you can see some opposite movements of both charts.

[GME 1 Day (4/19) - 1min](https://preview.redd.it/e8p7c4ak65u61.png?width=3018&format=png&auto=webp&s=dee6a97b69bb7f41cdaf7a85a06ff68fc3e9bfa2)

If you look at todays charts, you can see a clearly opposite movement of those charts.

[BTC Chart, GME Overlay (orange)](https://preview.redd.it/n05z2h4o95u61.png?width=3018&format=png&auto=webp&s=40b293e929e11f8da92e69e72e0a9a70434bbee6)

[GME Chart up to 4/13, BTC Overlay (orange)](https://preview.redd.it/uy25aaj6a5u61.png?width=3018&format=png&auto=webp&s=2a8ee2e360ff39e1ab1d1de50651b95504303d6f)

[GME Chart 3M, Bitcoin Overlay (blue)](https://preview.redd.it/lay3yut1l5u61.png?width=3018&format=png&auto=webp&s=b4df847734b312a54cb2e6fa3c5364aff50e4c5f)

[Marked down GME chart, BTC overlay (blue). Purple: inverse relation = buying crypto while price drops. Yellow Selling crypto (decreasing market cap) to buy dark pool shares?](https://preview.redd.it/tiak6t4uv5u61.png?width=3018&format=png&auto=webp&s=70d71de6b9561d99887cc0c680df2e4bc942a2ed)

The correlation started about ~~4/08~~ JANUARY, as far as I can see it right now. It might go even further (presumably down to about a year ago).

[Another GME Chart with BTC (blue) and SPY500 overlayed (orange)](https://preview.redd.it/2wao1qt5y5u61.png?width=3018&format=png&auto=webp&s=83d55d3d7f381ed98b2062e5682496c655a6943d)

[Last 6 Months of Crypto Volume (Bitcoin)](https://preview.redd.it/gojnrjgjx5u61.jpg?width=1440&format=pjpg&auto=webp&s=53fba714ce96199c711a52de6753d4365a1abaef)

4\. CONCLUSION

Thesis:

(I) Crypto provides a multiplayer laundering space via its various cryptocurrencies.

(II) HF might use crypto mixing services to wash their gained money.

(III) They gained money which was generated by their short positions by pushing the prices of shorted shares down, using shares they have bought in dark pools

(IV) Result: when shorted stocks go down (GME, AMC ...) crypto could be going inversely up.

(V) - weak) They sell crypto, when they need money to buy dark pool shares.

5\. UPDATE SECTION

#1: Question. tryied to explain a little bit deeper how this might be connected.

#2: inserted 3 Months GME Chart, BTC Overlay

#3: structured the post

#4: inserted crypto dark pools and crypto mixing services

#5: inserted marked down chart

#6: inserted bitcoin volume index of last 6 Months

#7: inserted SPY overlay

#8: inserted BTC, XRP, ETH, DOGE market cap changes overlay

#9: inserted DOGE P&D section

#10: inserted Ex-CFTC Chair Heath Tarbert, [credits](https://www.reddit.com/r/Superstonk/comments/mu2l9y/hedge_funds_might_be_using_crypto_btc_as_a/gv3t3mn/?utm_source=reddit&utm_medium=web2x&context=3) to [u/retardedStonkman](https://www.reddit.com/u/retardedStonkman/)

#11: added Houston Wades Talk, [credits](https://www.reddit.com/r/Superstonk/comments/mu2l9y/hedge_funds_might_be_using_crypto_btc_as_a/gv4016w/?utm_source=reddit&utm_medium=web2x&context=3)to [u/istros](https://www.reddit.com/u/istros/)

#12: inserted more sources

6\. SOURCES

<https://academy.binance.com/en/articles/a-simple-introduction-to-dark-pools>

<https://aisel.aisnet.org/ecis2015_cr/20/>

<https://bravenewcoin.com/insights/how-to-identify-a-crypto-pump-and-dump-scheme>

<https://www.blockchain.com/charts/output-volume>

<https://www.cftc.gov/PressRoom/SpeechesTestimony/tarbertstatement032420a>

<https://www.complianceweek.com/grapevine/ex-cftc-chair-heath-tarbert-joins-citadel-as-chief-legal-officer/30222.article>

<https://www.coindesk.com/tarbert-steps-down-cftc>

<https://www.emerald.com/insight/content/doi/10.1108/JMLC-10-2018-0063/full/html?casa_token=SUhe99yBZAoAAAAA:1NlnyvcG99hPaXMmRLXpC4P9Yxk9rA43QPED79P8gUBHlapt-nGy7SEduQZ_02WV3OTPsytA6EFztCYfGSxxen6MO7TX04oKV_fclzeQZeyh-sArDok>

<https://www.investopedia.com/articles/markets/050614/introduction-dark-pools.asp>

<https://www.investopedia.com/news/number-dark-pools-cryptocurrency-trading-increasing/>

<https://ngm.com.au/bitcoin-laundering/>

<https://www.reddit.com/r/Superstonk/comments/mpebkz/sells_through_the_major_exchanges_buys_through/?utm_source=share&utm_medium=web2x&context=3>

<https://www.reddit.com/r/Superstonk/comments/mq4jl6/gme_short_interest_at_160_minimum/>

<https://www.sciencedirect.com/science/article/pii/B9780128021170000151>

<https://www.sec.gov/news/statement/shedding-light-on-dark-pools.html>

<https://support.kraken.com/hc/en-us/articles/360001391906-Introducing-the-Kraken-Dark-Pool>

[https://tradingview.com/chart/e51WD8AG/](https://de.tradingview.com/chart/e51WD8AG/)
