> There was, however, one problem with such a plan. Any market where you yourself are the chief liquidity provider and in which flows remain pretty one-sided is also a market where you end up taking on the risk, regardless of whether or not you’re front-running your customers, benefiting from privileged information or setting withdrawal limits — this is largely because you’re dealing with paper profit creation. In some cases, a self-fulfilling feedback loop might even occur in which no matter how much bitcoin you pre-buy to sell to your customers at a premium, the underlying capital needed to acquire the bitcoin becomes proportionally ever larger in ratio terms. So you end up short-squeezing yourself to ruin.<p>So they speculate that he started with a bitcoin shortfall and attempted to buy bitcoins on his own exchange to buy his way out of the shortfall, but in doing so exacerbated the problem by increasing the price of bitcoin because mt. gox was really the only buyer of any size on teh exchange?<p>I can't think of another market where this has occurred. Can anyone else come up with a similar scenario that's played out like this in the past?<p>Worth reading the referenced article as well:<p><a href="http://www.thedailybeast.com/articles/2016/05/19/behind-the-biggest-bitcoin-heist-in-history-inside-the-implosion-of-mt-gox.html" rel="nofollow">http://www.thedailybeast.com/articles/2016/05/19/behind-the-...</a>