DOJ To Open Investigation Into Bitcoin Price Manipulation
The U.S. Department of Justice has opened an investigation into the possible price-manipulation of Bitcoin and other digital assets, Bloomberg reported on May 24th.
Federal prosecutors are working with the Commodity Futures Trading Commission (CFTC) for the investigation. The investigation is centered around two primary manipulation techniques: Spoofing and wash-trading.
Spoofing occurs when a trader submits a series of orders – aiming to signal a shift in future price and enticing unknowing investors – then cancels them after the price moves in a desired direction. Wash trading occurs when a trader trades with himself or herself to give the false impression of market demand.
Bitcoin reached record highs in 2017, peaking at over $20,000 per coin in December according to coinmarketcap.com. The cryptocurrency fell below $6,000 per coin shortly after, before recovering to $7,500 at the time of writing.
The investigation strikes a similar resemblance to the approach used to snuff-out manipulation during the rise of the equities markets.