Fork Wars: Poloniex Pre-Fork Futures Are a ‘Criminal Offence,’ Says Craig Wright

Francisco Memoria
  • 11 Nov 2018
  • Self-proclaimed Satoshi Nakamoto Craig Wright recently claimed Poloniex is offering naked shorts, which are a "criminal offence" in the US.
  • The exchange's pre-fork trading products may fit the definition, although there are exceptions.

Self-proclaimed Satoshi Nakamoto Craig Wright recently went after the popular cryptocurrency exchange Poloniex, as it’s currently letting its users trade the two planned bitcoin cash (BCH) implementations, Bitcoin Cash ABC (BCHABC) and Bitcoin Cash SV (BCHSV).

According to Wright, chief scientist at nChain, trading naked shorts is a “criminal offense” in the United States, where Poloniex, which was acquired by fintech firm Circle earlier this year, is based.

The chief scientist’s words came as the market has seemingly been deciding against the BCH implementation he and his firm support. As CryptoGlobe recently covered, as the market weighed in BCHSV had dropped to about $69, while BCHABC was trading at $470.

Coin.Dance data currently shows that 70% of businesses it tracks have revealed they support the Bitcoin ABC roadmap, while 34% showed support for Bitcoin SV’s roadmap. Wright’s claims against the exchange may, according to some analysts, have some validity.

This, as according to the US Securities and Exchange Commission (SEC), naked short selling has been banned since the 2008 financial crisis. Naked short selling is, per Investopedia, the practice of “short selling shares that have not been affirmatively determined to exist.” Since the exchange is trading the tokens pre-fork, they don’t actually exist.

Amendments made to existing regulations do seem to allow some exceptions, including bona fide market making in fast-moving markets. Wright’s words on the cryptocurrency exchange, however, didn’t end with the above tweet.

Responding to various users on social media, he claimed Poloniex could “go broke” if the BCH blockchain didn’t split, and stated he would “love to see Polo[niex] liquidated.” In one case, responding to a user who pointed out Poloniex was allowing pre-fork trading ahead of the November 15 hard fork, he said:

Poloniex is currently letting users trade BCHABC and BCHSV against Circle’s USDC stablecoin, and against BTC. Since Craig Wright’s words came, the gap between both BCH implementations has seemingly been diminishing as BCHSV is now at $98.9 after rising over 30% in the last 24-hour period, while BCHABC is at $448.7.

The BCH chain may split on the November 15 hard fork as the implementations aren’t compatible with each other. While BCHABC is looking to make the blockchain more efficient, the SV team defends, among other things, quadrupling the network’s block size to 128 MB.

BCHSV is catching up with BCHABC, although the difference between them is still large

Companies that support the ABC team include Chinese manufacturing giant Bitmain - which is reportedly looking to deploy 90,000 Antminer S9 ASICs to support it - Bitcoin.com, ViaBTC, BTC.top, and others. Behind the SV team are nChain, CoinGeek, mining giant SBI, and GMO.

CryptoGlobe reached out to Poloniex for comment. This article will be updated with their reply.