The bigger problem isn't whether or not it can be traced, or if it should be traced. It can and it should. The central issue at stake here is the sale of government secrets to private and (presently) anonymous groups for profit. The author is stating that since we don't know who the trader of that commodity is, and because that commodity's price is tightly coupled to actions related to the war, that trader could be helping enemies of the U.S. Without the knowledge of who the person is, or how they knew to make such a huge market movement, a claim of treason can be argued.
The biggest problem is the intelligence community is heavily rooted in trust. Movements like these signal there's an intelligence leak to the general public, or more appropriately, someone with $580 million lying around. An intelligence leak reduces trust; allies are less likely to share information if it's leaked. Conversely, trust is returned when the leaks are found and plugged, and measures put in place to prevent those leaks in the future. The author is stating that these leaks are unlikely to be plugged, which will reduce trust in American intelligence. After all, as the president said, "Let's say I was gonna do it or let's say I wasn't gonna do it, why would I tell you?" (https://www.bbc.com/news/live/c4gqjyk0vx3t)
Except he is telling someone, and that someone is making a lot of money.
1. Brokerages, banking, and the financial sector in the U.S. is tightly regulated. Personal financial information is very private, and financial data breaches are treated seriously (See: Equifax). You shouldn't be able to publicly trace it. It won't be disclosed unless the owner of the account consents (like a credit check), or a subpoena is issued. If the trader isn't suspected of a crime, there's no reason for others to know who placed those contracts.
2. Crypto is a unique and new player in banking and securities. Specifically, the ledger is open to all and very transparent. In order to know which wallet owns what and how much, you need to be able to look at the ledger to confirm. This design is intended to prevent fraudulent transactions. Banks and brokerages don't keep an open ledger, they keep an extremely private and heavily secured database.
3. People are heavily disincentivized to disclose this information. See: Epstein, and the people and companies that did financial business with him. Openly telling the public you sold stock to someone who trafficked underage girls isn't good for your reputation.
4. Futures in this case are similar to stocks. It's literally a market: You put in a bid to buy or sell something, someone else accepts, and both parties agree to a contract. Digital trading systems match buyers to sellers, and does so on behalf of both parties. If you trade using Fidelity and place a bid for 1,000 units of Corn at $500/unit, you might end up buying from Chase. Even if the transaction is in-person, the trader may be acting on behalf of someone else. In the case of the $580 million deal, it was spread over 6,200 contracts.
5. The STOCK Act of 2012 was supposed to prevent this, at least for members of Congress. The PELOSI Act that's currently introduced for voting is supposed to further prevent this.
6. To my original point: the problem isn't that these trades occurred. The problem isn't even that it's almost certainly insider trading. The problem is that government secrets are being leaked. The authors argument is that it almost certainly won't be investigated and any attempt at investigation will be blocked, because the level of corruption in the current administration is such that the sale of state secrets for others to profit off of is permissible. In fact, they can brazenly do it in the open while still ensuring that their privacy will be kept because of #1.
Unfortunately it’s mostly wrong. And the reason it’s not public is much simpler. These markets are both standard contracts on CME matching engines.
The CME uses a system where orders (and fills) are entered via a direct TCP/IP connection between the trading system and the exchange. There is no opportunity for any system besides the trading systems (computers, switches, etc) on each side to see the order.
The CME then distributes the market data to a variety of paths in the form of price updates to an order book. That is the price and quantity of buy and sell orders at each price point. While these data feeds aren’t public, the cme gets paid for the data, it is widely disseminated, but it’s had the trading system identification removed. This whole story comes from people with market data contracts observing these feeds.
There are other exchanges that provide more information about who is entering orders but infrequent but large participants don’t like this because it allows the market makers an information advantage against them. And large block participants tend to correlate with real economic activity (oil producers and consumers for instance).
If a market maker knows an order is for one of these participants they can presume the size is going to be bigger and thus charge more for liquidity (in the form of of widening the price on their bid/ask spread offerings). Half the job of a modern HFT is predicting this sort of thing.
So the cme keeps it this way so one set of their market will keep using them. It’s part of the balancing act a two sided exchange has to navigate.
Maybe because the rot runs so deep in Washington that nobody really wants this to be a big deal. A little like the Epstein files: so many people would be caught up in the web if insider trading in DC were properly investigated that nobody wants to go there.
We (the US) put a high bar on it because the Crown was using it as a way to attack political enemies and we didn’t want to follow suit. It is such a high bar in this country that it is effectively dead law, as nobody has been tried for it since soon after WWII, and very very few people have been convicted, and of those several had their convictions overturned.
The current administration does, however, throw the term around against its political enemies quite a bit, as have people in general pretty much throughout history.
The Constitution put a pretty high bar on a lot of things. They put an enormous thumb on the scale of the status quo, which benefits some and harms a lot of others. Especially since the proponents of the status quo get to now put their hands on their hearts and say "gosh, I'd like to fix that injustice, but the holy Constitution means I just can't."
If having a fig leaf of an excuse really better? Its not like the acts or methods being now clearly observed now are anything new. Its just they aren't disguised
It's falling that people support this without even pretending that it's about something other than their hatred for you.
In the past we had to pretend to be civil, and that illusion let us get back to work between elections. The utter disregard for the law forces us to grapple with the fact that they have so little respect for us that they will not care if there isn't another election.
You don't think starting a war apparently to distract the media, then lying about peace talks solely to drain money from the markets is treasonous?
How about when combined with all the tariffs, which seem designed to be market levers and/or just vindictive acts?
Pushing businesses to the edge, plunging people into poverty, so your cronies and you can drain money from the stock market?
Or taking bribes using crypto? Or ...
They all seem treasonous - actively harming your own country to enrich yourself.
Even if you don't find them treasonous, you have to admit they're in contravention to the emoluments clause; so Congress should still impeach the evil bastard.
And we haven't even started on his crimes beyond the simple financial ones from the last year!
Treason means something very specific in the US, intentionally. It’s one of only a couple of criminal acts defined in the constitution.
“Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort.”
So no. None of those things is treason. This administration throws the word around loosely, like many authoritarian regimes, but the founders had direct experience with a dictator who used treason charges as a political weapon and tried to ensure that wouldn’t happen here.
I do feel as if threats to apply the crime of treason while are, if not treasonous, crimes themselves. Threats are a criminal act, and there is a long precedent to disallow "I wasn't really gonna do it" as a defense.
For the administration as a whole... Honestly, as disgusted as I am, I can't think of a case where a significant fraction of the country looked at a treasonous action and said "yeah, I'd vote for that again".
When his supporters turn against him he will be impeached. Until then, it's just the suicide pact called the Constitution.
So, who is paying the bill here? I am assuming the insider trading itself is zero-sum (its obviously different if what's happing happens only to allow insider trading) and while some (like passive investors like me that buy every month) win a bit, others lose a bit, someone loses big on the futures market. Is that the high frequency and quant traders? Because I assume, someone must be really mad? Especially since, and I again 'assume', that there must be easier and less public ways to bribe the admin
It's you. Every trader who does not have the insider information loses. That's how markets work after all. They collect information by rewarding the use of information. Anyone who has information and uses it is rewarded and anyone who does not is punished.
Even when you are a passive investor you lose. You essentially buy shares at random points in time. When that point happens to fall between the trading of an insider and the public disclosure of the insider information you will get a worse price for that trade.
It isn't even relevant whether the insider buys stocks or other securities directly or trades in futures instead. All information you enter into the market through trades permeates the whole market through arbitrage regardless of where you enter that information.
The losses would be diffuse. In the commodities markets you have a blend of speculative action and real economic activity. The blend is different based on the contract as well. The emini futures are pure financial engineering so it’s harder to track directly to the underlying economic activity.
Wti is much easier. Lots of real economic actors that produce or consume oil are active in those markets.
And very soon, as economics and behavioral sciences suggest, we will have world events directly influenced by people having the incentives to make them happen for financial gains only.
There's a reason we have banned and prosecuted any hint of insider trading or match fixing for centuries. Yet we play dumb on way more serious risks, allowing betting on whether a country will attack another and labeling it "information hedging and price discovery".
I can't but look at the modern world with worry. We live in increasingly Orwellian and dystopic times. The world has never been so rich and evolved, yet, as a society, we're increasingly unhappy, alone and void of purposes that aren't greed and selfishness related.
We're looking at the decadence of a civilization and all we can do, at best, is post about it over the internet, and that's when we're in the aware crowd not falling for bitter insulting and fighting because somebody else holds different ideas.
I would really want to know what can we do, as average Joes, when the most powerful people in the world fall in line and are terrorized to speak their mind. And that's when they're not actively contributing to the very same decadence.
None of this is any surprise to people who had two brain cells to rub together. He showed massive corruption in his first term, and despite being impeached twice, got away with it scot free. Then got a huge mandate from the people to be a shitty person, so yeah, he’s corrupt. The majority of voting Americans don’t really seem to care.
"Treason" is a bit hyperbolic. Futures are governed a bit differently around MNPI versus equities - based on CFTC rules. If the MNPI was obtained through a duty breach then it still "might" be illegal. Most futures MNPI enforcements have been around energy data or FOMC announcements. But its usually noticed due to consistent, repeated patterns. A one-off event like this, while egregious, is probably not going to be chased. Not saying thats right... I am just saying the grift will continue...
While I agree it is very suspicious, needs investigating and far, far greater oversight in general, I'm not sure there is enough to conclude this definitely is insider trading. Markets are weird. People trade for weird reasons, sometimes gently and in small size, sometimes aggressively and all at once. We're zooming in at a short window just before the tweet. If you look at random windows you'll find these too. 6.49 am is around lunchtime in Europe, and people exist there too. Crude oil liquidity isnt at its peak at that time but certainly not "thin". It's really not that uncommon for traders to accidentally send a "fat finger" trade, much bigger in size than intended or appropriate for the market conditions.
I'm not trying to split hairs here. There's been plenty of weird coincidences and each should be investigated, and on the balance of probability at least one may well be insider trading at the highest echelons. And in any case, in any financial job you need pre clearance for trades, often justifying why you're doing them if they are odd enough. There are minimum holding periods, day trading is not allowed, and the full record auditable by regulators. It is insane to me that politicians are not subject to such rules and it must change.
But to conclude that a weird trading pattern is definitely insider trading is IMO cheap. It's like TV drama where the unemployed, wife-beater-wearing husband definitely killed the wife, end of story.
The real tragedy IMO is that this is really avoidable. It would take very basic, very standard regulation to stamp this out, and we wouldn't be debating this in a technology forum.
61 comments
This is actually not new in this administration. Last year the president posted on social media telling people to buy stocks a few hours before he announced tariffs (https://apnews.com/article/trump-truth-social-djt-tesla-musk...).
The bigger problem isn't whether or not it can be traced, or if it should be traced. It can and it should. The central issue at stake here is the sale of government secrets to private and (presently) anonymous groups for profit. The author is stating that since we don't know who the trader of that commodity is, and because that commodity's price is tightly coupled to actions related to the war, that trader could be helping enemies of the U.S. Without the knowledge of who the person is, or how they knew to make such a huge market movement, a claim of treason can be argued.
The biggest problem is the intelligence community is heavily rooted in trust. Movements like these signal there's an intelligence leak to the general public, or more appropriately, someone with $580 million lying around. An intelligence leak reduces trust; allies are less likely to share information if it's leaked. Conversely, trust is returned when the leaks are found and plugged, and measures put in place to prevent those leaks in the future. The author is stating that these leaks are unlikely to be plugged, which will reduce trust in American intelligence. After all, as the president said, "Let's say I was gonna do it or let's say I wasn't gonna do it, why would I tell you?" (https://www.bbc.com/news/live/c4gqjyk0vx3t)
Except he is telling someone, and that someone is making a lot of money.
>
It's not that it can't be traced, the author is stating it won't be traced because high-ranking government officials are selling those secrets."US SEC's ex-enforcement chief clashed with bosses over Trump cases before leaving, sources say":
* https://www.reuters.com/business/finance/us-secs-ex-enforcem...
"SEC enforcement director quits":
* https://www.cfodive.com/news/sec-enforcement-director-abrupt...
The head of the SEC didn't want the SEC's investigation division to investigate (certain things).
2. Crypto is a unique and new player in banking and securities. Specifically, the ledger is open to all and very transparent. In order to know which wallet owns what and how much, you need to be able to look at the ledger to confirm. This design is intended to prevent fraudulent transactions. Banks and brokerages don't keep an open ledger, they keep an extremely private and heavily secured database.
3. People are heavily disincentivized to disclose this information. See: Epstein, and the people and companies that did financial business with him. Openly telling the public you sold stock to someone who trafficked underage girls isn't good for your reputation.
4. Futures in this case are similar to stocks. It's literally a market: You put in a bid to buy or sell something, someone else accepts, and both parties agree to a contract. Digital trading systems match buyers to sellers, and does so on behalf of both parties. If you trade using Fidelity and place a bid for 1,000 units of Corn at $500/unit, you might end up buying from Chase. Even if the transaction is in-person, the trader may be acting on behalf of someone else. In the case of the $580 million deal, it was spread over 6,200 contracts.
5. The STOCK Act of 2012 was supposed to prevent this, at least for members of Congress. The PELOSI Act that's currently introduced for voting is supposed to further prevent this.
6. To my original point: the problem isn't that these trades occurred. The problem isn't even that it's almost certainly insider trading. The problem is that government secrets are being leaked. The authors argument is that it almost certainly won't be investigated and any attempt at investigation will be blocked, because the level of corruption in the current administration is such that the sale of state secrets for others to profit off of is permissible. In fact, they can brazenly do it in the open while still ensuring that their privacy will be kept because of #1.
Very interesting. I wonder how much good a publicly transparent trading system would do. And what downsides there are, of course.
The CME uses a system where orders (and fills) are entered via a direct TCP/IP connection between the trading system and the exchange. There is no opportunity for any system besides the trading systems (computers, switches, etc) on each side to see the order.
The CME then distributes the market data to a variety of paths in the form of price updates to an order book. That is the price and quantity of buy and sell orders at each price point. While these data feeds aren’t public, the cme gets paid for the data, it is widely disseminated, but it’s had the trading system identification removed. This whole story comes from people with market data contracts observing these feeds.
There are other exchanges that provide more information about who is entering orders but infrequent but large participants don’t like this because it allows the market makers an information advantage against them. And large block participants tend to correlate with real economic activity (oil producers and consumers for instance).
If a market maker knows an order is for one of these participants they can presume the size is going to be bigger and thus charge more for liquidity (in the form of of widening the price on their bid/ask spread offerings). Half the job of a modern HFT is predicting this sort of thing.
So the cme keeps it this way so one set of their market will keep using them. It’s part of the balancing act a two sided exchange has to navigate.
Even if they found the culprits, what's a judge's verdict against a presidential pardon?
> Even if they found the culprits, what's a judge's verdict against a presidential pardon?
This is bad logic. A presidential pardon at least exposes the corruption, and exposing the corruption is more important than a prison sentence.
We've very little doubt its happening, and it does us no good if there arent actions taken against it.
The question is not if it can be investigated it’s if it will be and what will happen with the findings.
The first thing the Trump admin did in its second term was gut the anticorruption offices and the cftc.
Flynn just got large payout as reward for breaking the law for Trump.
That is why.
The fact that nobody seems particularly surprised by it suggests that the damage is long since done.
The current administration does, however, throw the term around against its political enemies quite a bit, as have people in general pretty much throughout history.
[0] https://en.wikipedia.org/wiki/War_profiteering
In the past we had to pretend to be civil, and that illusion let us get back to work between elections. The utter disregard for the law forces us to grapple with the fact that they have so little respect for us that they will not care if there isn't another election.
How about when combined with all the tariffs, which seem designed to be market levers and/or just vindictive acts?
Pushing businesses to the edge, plunging people into poverty, so your cronies and you can drain money from the stock market?
Or taking bribes using crypto? Or ...
They all seem treasonous - actively harming your own country to enrich yourself.
Even if you don't find them treasonous, you have to admit they're in contravention to the emoluments clause; so Congress should still impeach the evil bastard.
And we haven't even started on his crimes beyond the simple financial ones from the last year!
“Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort.”
So no. None of those things is treason. This administration throws the word around loosely, like many authoritarian regimes, but the founders had direct experience with a dictator who used treason charges as a political weapon and tried to ensure that wouldn’t happen here.
For the administration as a whole... Honestly, as disgusted as I am, I can't think of a case where a significant fraction of the country looked at a treasonous action and said "yeah, I'd vote for that again".
When his supporters turn against him he will be impeached. Until then, it's just the suicide pact called the Constitution.
Even when you are a passive investor you lose. You essentially buy shares at random points in time. When that point happens to fall between the trading of an insider and the public disclosure of the insider information you will get a worse price for that trade.
It isn't even relevant whether the insider buys stocks or other securities directly or trades in futures instead. All information you enter into the market through trades permeates the whole market through arbitrage regardless of where you enter that information.
Wti is much easier. Lots of real economic actors that produce or consume oil are active in those markets.
There's a reason we have banned and prosecuted any hint of insider trading or match fixing for centuries. Yet we play dumb on way more serious risks, allowing betting on whether a country will attack another and labeling it "information hedging and price discovery".
I can't but look at the modern world with worry. We live in increasingly Orwellian and dystopic times. The world has never been so rich and evolved, yet, as a society, we're increasingly unhappy, alone and void of purposes that aren't greed and selfishness related.
We're looking at the decadence of a civilization and all we can do, at best, is post about it over the internet, and that's when we're in the aware crowd not falling for bitter insulting and fighting because somebody else holds different ideas.
I would really want to know what can we do, as average Joes, when the most powerful people in the world fall in line and are terrorized to speak their mind. And that's when they're not actively contributing to the very same decadence.
I'm not trying to split hairs here. There's been plenty of weird coincidences and each should be investigated, and on the balance of probability at least one may well be insider trading at the highest echelons. And in any case, in any financial job you need pre clearance for trades, often justifying why you're doing them if they are odd enough. There are minimum holding periods, day trading is not allowed, and the full record auditable by regulators. It is insane to me that politicians are not subject to such rules and it must change.
But to conclude that a weird trading pattern is definitely insider trading is IMO cheap. It's like TV drama where the unemployed, wife-beater-wearing husband definitely killed the wife, end of story.
The real tragedy IMO is that this is really avoidable. It would take very basic, very standard regulation to stamp this out, and we wouldn't be debating this in a technology forum.