U.S. Justice Department Takes On Bitcoin Price Manipulation In A New Probe - Report
(Kitco News) - The U.S. Department of Justice is taking a closer look at bitcoin and ethereum in its new criminal probe that examines allegations of price manipulation by traders, Bloomberg reported citing people familiar with the investigation.
“The investigation is focused on illegal practices that can influence prices — such as spoofing or flooding the market with fake orders to trick other traders into buying or selling,” the media company said.
Bitcoin dropped following the news, last trading at $7,549.40, down 0.36% on the day, according to Kitco’s aggregated charts.
Allegations of price manipulation are not new in the cryptocurrency world. Bitcoin raised a lot of eyebrows, when it surged from just under $1,000 to almost $20,000 last year, with many investors calling out the digital currency for its volatility.
Lack of regulation surrounding cryptocurrencies is what worries federal authorities, as that leaves the market vulnerable to abuse, a number of sources told Bloomberg.
“Authorities worry that virtual currencies are susceptible to fraud for multiple reasons: skepticism that all exchanges are actively pursuing cheaters, wild price swings that could make it easy to push valuations around and a lack of regulations like the ones that govern stocks and other assets.”
The Commodity Futures Trading Commission (CFTC) is helping the Justice Department with the investigation, according to the report.
Some of the more specific behaviors federal prosecutors will be investigating include “spoofing” and “wash trading.”
The Justice Department declined to comment on the matter and the CFTC did not respond to Bloomberg’s requests.