Finally: Bitcoin Price Manipulation Subject of Criminal Probe by US Justice Department

The U.S. Department of Justice has started a criminal probe into whether cryptocurrency traders are manipulating the price of bitcoin and other digital coins, Bloomberg reported on Thursday.

The probe will look for evidence of known manipulation practices like spoofing and wash trading, both tactics involve creating false orders to create the impression of genuine market activity, the report said, citing anonymous sources with knowledge of the investigation.

In spoofing, a trader submits a range  of orders and then cancels them once prices move in a desired direction. Wash trades involve a cheater trading with herself to give a false impression of market demand that lures other to dive in too. Coins prosecutors are examining include Bitcoin and Ether, the people said.

It is definitely the case that cryptocurrencies such as Bitcoin are frequently experiencing wild swings that are not easily explained, so this might be the answer why this happens. It may also be the case that not all exchanges implement strict controls to spot and stop this sort of cheating.

According to authorities, virtual currencies can be subject to fraud for reasons that include skepticism that all exchanges are actively pursuing cheaters, lack of regulations similar to that governing stocks and other assets and sharp price swings.

Earlier this year, Winklevoss brothers’ Gemini platform teamed up with Nasdaq to monitor all its markets for manipulation and unusual trading patterns using a cutting-edge surveillance technology used among the world’s largest  stock exchanges.

The price of bitcoin dropped as the news was announced to $7,339, and was down more than 6 percent, according to bitcoin exchange Coinbase.

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Rene Peters
Rene Peters

Rene Peters is editor-in-chief of CaptainAltcoin and is responsible for editorial planning and business development. After his training as an accountant, he studied diplomacy and economics and held various positions in one of the management consultancies and in couple of digital marketing agencies. He is particularly interested in the long-term implications of blockchain technology for politics, society and the economy.

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