Why Ghost Trades Scare Me

Greetings Spheroids,

One of the big reasons why Cardsphere is able to operate so lean and be so responsive is the community. It's great. You guys freeze trading on cards before we even know that there's been a reprint, you help train new users on how we work, and you let us know when you think something's wrong.

This week my phone started blowing up with all the many ways the community can reach me: Discord, Twitter, Facebook, email. So I knew something was up. The community was reaching out to show me this:

A Near Mint Volcanic Island clearly should not be moving for $55.00. Right away, I understood this was a Ghost Trade. And I don't mean Geist of Saint Traft.

A What?

A Ghost Trade. One where cards never actually change hands, used to transfer funds between users. I hope everyone's taken the time to review our Terms of Service, but even if you have and know it's against the rules, you might not understand why. And there are pretty important reasons why.

While Ghost Trades seem harmless, they actually threaten the community in two major ways:

• Illegal Money Transfer Risk
• Market Damage

Michael's going to step in here for a moment to explain the legals, because uhh... he's the smart one.

Legal Implications

Cardsphere is a vanilla service business: we provide match making, escrow, dispute resolution, and other service to our users. Transfers of value are carried out exclusively in conjunction with a trade of a physical asset and only to the extend required for Cardsphere to be able to provide its services. This is the type of activity that does not require registration or compliance with FINTRAC or FINCEN regulations.

Notice how Cardsphere never transfers value for the sake of transferring value from one individual to another. Because if we were, that would make us a money service business and require registration and a compliance regime. For such a small team that would be quite prohibitive. Think Paypal or Western Union. Cardsphere is not like them.

Ghost trades are attempts to use Cardsphere for the wrong purpose. As business owners we have a duty to protect Cardsphere from unnecessary and avoidable legal risks. It is our responsibility to make sure such occurences are few and far between.

Market Damage

Thanks, Michael. I would not have got that right.

Ghost Trades also harm the Cardsphere market in a few ways. First and foremost is that our statistics get corrupted. Low offers are used to make sure other traders don't snipe the trade, and that means our data about card value becomes worthless. Imagine other users also made Ghost Trades off this printing of Volcanic Island so half of its trade history was priced appropriately, and half was garbage.

We provide the trade history for cards because we want the community to be armed with as much information as possible when making or fulfilling offers. We'd also like to eventually be using our own data to set index prices for cards, either partially or in full. Clearly, for that to happen there simply can't be any Ghost Trades.

Perhaps even worse than the direct damage that Ghost Trades do to the market this way, is the impact it can have on the overall market growth. People who aren't using the system often think they won't get full value for their cards because they see offers less than 100%. And admittedly, it's a bit tough to sell someone on the facts that make this irrelevant (like you purchase at the same or better relative rates). When someone with this mindset sees a trade for a $55.00 Near Mint Volcanic Island they are gone.

They don't even need to get to the card page itself. Ghost Trades in any significant numbers may also impact the data on the Market Dashboard.

The Rules Are The Rules

So, please no Ghost Trades.

In this case, we have given the two traders involved temporary suspensions only -- because we felt we had not fully explained the problems with Ghost Trades suffciently. Now we have.

In the future, anyone making Ghost Trades risks a permanent ban from Cardsphere. We simply cannot risk the community that we have spent the last year building up. Thank you all for understanding, and putting Cardsphere to its purpose instead: moving cardboard!