This zero sum nature is the key to laundering the money. Person A and Person B get together and guess that the price for a commodity is going to go up.
Guess. Read that word again; it's important.
That means that who ever buys a contract will make money. So Person A, the intended recipient buys a contract and Person B sells a contract. If they're right, then Person A gets the money and Person B loses the same amount.
Bingo. The money moved from B to A and no one can trace how it got there.
_If_ they're right.
You may wonder why B bothered to sell a contract and lose money. This is the safeguard against guessing wrong. No one is correct all of the time. Even the people who try and rig the markets and corner them get burned as often as they succeed.
So then, let's take the probability of guessing right at 1/2. [then is described the double-up strategy]
Ideally, you play this game with two players with relatively deep pockets. This means that A can cover the short term loses.
Here's the flaw, in full glory. This scheme is the classic double-or-nothing martingale. It doesn't work. The "relatively deep pockets" of A have to be infinite, because that's the expected value of the amount of A's intermediate loss in the random walk to the completion of the transaction. The example is ludicrous, but the conclusion is valid. More transactions means more interactions between them and more possibility to hide something inside the ever-increasing flux. Eric