The U.S Department of Justice launched a criminal investigation into crypto traders that may have manipulated the price of Bitcoin and other virtual currencies. This investigation is conducted with the Commodity and Futures Trading Commission (CFTC).
The main focus of the probe is to prevent illegal practices that can influence the price of cryptocurrencies
Some illicit tactics employed in manipulating prices include spoofing and fake orders.
China reportedly is concerned that cryptocurrencies are susceptible to fraud. The Chinese government thus placed a ban on cryptocurrency exchanges. Other nations including Japan and the Philippines decided to ensure that there is proper regulation of cryptocurrencies.
The Department of Justice is mainly concerned about regulators that engage in spoofing and wash trading. Some crypto traders may cheat the system by sending themselves large volumes of orders to create a mirage of increasing demand. This deceptive move serves to trick other investors to make a similar move as well.
Department of Justice Makes Effort To Restrict Crypto Market Manipulation
Crypto market manipulation is rampant. John Griffin, a finance professor at the University of Texas comments in one report that crypto trading has limited oversight. This reason he claims makes it a target for dishonest individuals.
The investigation reportedly led to a 3 percent price decrease for Bitcoin and this is the trend that has continued over the past month. Some crypto exchanges realize that a constraint in the crypto space could emerge if investors choose the “buyer beware” approach to supervision.