Justice Department and CFTC to launch a probe into crypto markets?

The United States Justice Department has launched a criminal probe into manipulation in cryptocurrency markets. The probe in question will determine whether traders are manipulating the price of Bitcoin. The information comes from sources close to the matter, as reported by Bloomberg.

This comes after Bitcoin’s flash drop in price yesterday, where it dropped down from $7900 to around the $7600 mark in just about 20 minutes. This marked a drop of nearly 3% in just an hour.

The investigation by the Justice Department is focused on illegal practices that may influence prices. This includes practices such as spoofing, which is a practice of flooding the market with fake orders. The federal prosecutors are working with the Commodity Futures Trading Commission, known for its chairman Christopher “CryptoDad” Giancarlo.

Even as these regulators have been trying to root out spoofing and other forms of misinformation in legacy trading markets, they worry that crypto markets are even more susceptible to fraud due to their volatile nature. Hence, the regulators are examining coins not only limited to just Bitcoin and Ethereum.

The CTFC is concerned over the well-being of US citizens, as Bitcoin and other cryptos are a prime target for investment by senior citizens and other such individuals. The regulators are also concerned that a large number of individuals jump into cryptos without knowing much about the market.

This is also the same story data, with social trading platform eToro’s survey stating that almost 80% of investors have novice-level knowledge of the market.

To help along regulation of a new market that legacy regulators find difficult to adopt to, influencers in the crypto exchange space such as the Winklevoss Twins have urged other trading platforms to form a group that would serve as a self-regulator. They recently hired financial services corporation Nasdaq Inc. to conduct surveillance of their platform.

Cryptocurrencies have begun accepting the beginnings of regulatory frameworks, with many exchanges accepting to adhere to Anti-Money Laundering [AML] and Know Your Customer [KYC] compliances. It is left to see how a market that came out of distrust in banks and the government will respond to a direct investigation by regulatory authorities.

Twitteratis responded to this development, with user AR Sol saying:

“OMG are you serious!? The cryptomarket is daily manipulated with a bullshit telegram groups who pump/dump the price of a coin to cheat the people who try “catch the wave”?! I didn’t know!  On a serious note, hope something will be done about it actually.”


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