US launches criminal probe into bitcoin price manipulation

US launches criminal probe into bitcoin price manipulation

US launches criminal probe into bitcoin price manipulation

The Justice Department has opened a criminal investigation into the possibility that the prices of bitcoin and other cryptocurrencies are being manipulated by traders, according to Bloomberg.

Representation of the Bitcoin virtual currency standing on the PC motherboard is seen in this illustration picture, February 3, 2018.

The investigation is reportedly focused on the possibility that some may be employing tactics such as flooding markets with fake orders, in order to manipulate prices.

A Justice Department spokesman declined Bloomberg's request for comment and CFTC officials did not respond to their requests for comment. Wash trades involve a cheater trading with herself to give a false impression of market demand that lures other to dive in too. In the US, the CFTC is capable of imposing fines on spot market fraud even though the agency does not regulate it. Cameron and Tyler Winklevoss have also urged trading platforms to band together to form a group that would serve as a self-regulator for the industry.

Cryptocurrency trading is fragmented on dozens of platforms across the globe, many of which not even registered with the relevant financial watchdog.

Unlike in Japan, where virtual currency exchanges are subject the same rules and oversight as any other financial institutions and are required to register with the government, in the USA and other countries, cryptocurrency exchanges are still largely unregulated, opening up the doors to fraud and manipulation.

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Some market participants have alleged that crypto manipulation is rampant.

Lack of regulation surrounding cryptocurrencies is what worries federal authorities, as that leaves the market vulnerable to abuse, a number of sources told Bloomberg.

Some of the theories bandied about by WhaleClubbers: Sellers were rushing in to trade bitcoin after hearing about the price manipulation; crypto whales were trying to catch short-sellers out; or market manipulators were indeed manipulating the market.

Claims about price manipulation in digital currency have been circulating for years, but to date, there has been little concrete evidence that trading conspiracies exist.

According to his work, Spoofy was a trader or group of traders that often placed orders of $1 million or more, without actually executing them.

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