- real coins bought by users using EURT are tradeable to other exchanges, where one is free to get real money in exchange for the coins, and then cash out in real fiat. profits from this can be used to buy more coins, on all exchanges, increasing demand, and leaving a bagholder somewhere with EURT.
- arbitrage bots, and arbitrage in general, pull all exchanges up as demand lags. it is profitable to buy the cheaper coins (on non-EURT exchanges), and sell them elsewhere (on EURT exchanges), but this also increases demand on the cheaper, non-EURT exchanges for coins. thus, demand increases on all.
- for a corrupt exchange, it might be possible to credit a real user’s Euro input with EURT, giving the exchange free euro currency to spend, and also said user EURT to spend. this effectively doubles the amount of Euros in play whenever a user swaps Euros for EURT.
- a corrupt exchange might spend EURT on real coins to then be transferred and cashed out on other exchanges, giving them free real euros to spend as they wish, in addition to the euros deposited in their accounts by users in exchange for EURT.
- using euros from all the above, a corrupt exchange could amass enough capital to further pump and dump the markets. this would mean that a corrupt exchange could speculate on predictable price movements, guaranteeing profits, that could then be pumped back into various coins.
- crediting users with EURT on an exchange instead of crediting them with real currency is, i guess, much faster. users who would have been incapacitated waiting, are now able to spend more easily (demand, liquidity increases).
- crediting a user with EURT instead of euros maintains an exchange’s real fiat reserves, that can then be spent elsewhere or hodld. there is evidence that corrupt exchanges operate on their own exchange, and other exchanges, as recordings held by Bitfinex’ed prove. more euros to spend means more demand for coins, in euros.
- the above conspires to make the market look very rosy indeed. and people, in the wake of “increased demand” want to get their hands in, and start buying. the fake demand generates real demand, perhaps, and pumps all prices accordingly.
of course this is not sustainable.
since buying and selling of fake assets is going on, demand is actually decreasing as this practice continues (real fiat is being spread thinner and thinner as it is siphoned out the system) — the coins bought with EURT are eventually sold on other exchanges if they are to be “profitable”, in real fiat, i imagine.
what stops this decrease, or implosion, in the short term is real user hype, as people jump on the train to get involved, and further inflate the system with their real fiat.
and, if a pump is hard enough, real users start subsidising the EURT sell offs in other exchanges by putting their real money in. the hype is self-fulfilling.
so, this predicts that demand will spiral downward slowly in pumps and dumps and pumps and dumps, as real fiat leaves the exchanges, and until real money starts going back into the system (perhaps as a result of a pump described above).
all while a corrupt exchange probably slowly siphons the hodlers real fiat out of the system (the strong hands) and leaves a bunch of bag holders in place.