A bucket shop is a type of fraudulent unregulated business which offers a broker-like service for speculating on purely fictional positions in an asset or currency using the funds of unwitting investors. The defining features of this type of fraud is there is no actual transfer or delivery of the underlying assets allegedly being dealt in.
Bucket shops were made in illegal in the United States in 1922. Bucket shops are often cited as a major contributing factor to the market crash of 1929 leading the Great Depression.
See also crypto exchange.
- Lefevre, Edwin. 2004. Reminiscences of a Stock Operator. Vol. 175. John Wiley & Sons.