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Trader pleads guilty to sparking stock market ‘Flash Crash’

If you were trading on an American stock market on May 6th, 2010, you probably had a minor heart attack: the "Flash Crash" that day sent the Dow Jones Industrial Average down 1,000 points (600 in the first 5 minutes) and recovered virtually all its value in the space of just 15 minutes. However, investigators eventually discovered that the crash was the result of intentional manipulation... and now, investors are getting some justice for that manufactured crisis. Navinder Sarao (above), a British trader extradited to the US, has pleaded guilty to charges of both wire fraud and spoofing that came from using automated trading software to make "at least" $12.8 million in illegal profit from the crash and beyond.

Sarao says he used the program to make thousands of bogus orders for E-mini S&P 500 futures contracts (including 85 sell orders on the day of the crash), creating an illusion of supply that fooled others into trading when they otherwise wouldn't. When that happened, he'd make real trades to capitalize on the artificial values. Assistant Attorney General Leslie Caldwell claims that Sarao not only hurt "countless" traders with these money grabs, but risked ruining the "integrity" of American stock markets in the process.

Sentencing has yet to take place. With that said, Sarao's actions might have headed off some attempts to game the system with rapid-fire, software-based trading. While these sorts of incidents still happen, the "Flash Crash" raised awareness of the problem and helped foster concepts like circuit breakers, which automatically halt trading when there's a sudden and dramatic spike in activity. The guilty plea may close a key chapter in financial history, but it's also a reminder that safeguards are still important for preventing digital scams.

Source: Department of Justice

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Bitcoin is surging thanks to Trump’s victory


Today is a strange day for the US — even though you might not have seen it coming, Donald Trump is now president-elect. And that’s doing some interesting things to the cryptocurrency markets. According to CoinDesk, Bitcoin prices have been steadily rising as Trump’s victory was looking more and more real throughout election night. At its highest point the popular cryptocurrency reached $738, up from a low of $703 around the time polls in the US were closing down. As America wakes up again right now, the price seems to have slightly dropped to $725. That’s nowhere near as bad as…

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Cryptocurrencies rise on Trump victory

bitcoin Donald Trump’s historic victory in the 2016 US presidential elections predictably immediately hammered the value of the dollar on foreign currency exchange markets. But it’s the opposite story if you’re looking at cryptocurrencies. Read More
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The insurance impact of self-driving cars and shared mobility

self-driving-car “We’re going to see more change in the next five to 10 years than we’ve seen in the last 50,” said Mary Barra, CEO of General Motors, on record. While that statement is now a year old, it continues to ring true. Vehicle ownership is changing and self-driving cars will be implemented in the next decade. What will affect the insurance industry more: self-driving cars… Read More
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How peer-to-peer payment app Cookies imploded

cookie Only a couple of months after the official launch, German startup Cookies announced on its blog that it is filing for bankruptcy. According to the blog post and discussions I had with multiple sources, it’s filing for bankruptcy due to an argument between the co-founders and a lack of funding. Based on what I’ve heard, there are clearly two sides to the story here. Read More Comments closed
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