DOJ Starts Investigating Alleged Crypto Price Manipulation

DOJ Bitcoin Price Manipulation

Bloomberg reported on May 24th that it appears a probe by the US Department of Justice has been opened on allegations of price manipulation of Bitcoin and Ethereum.

Bloomberg’s report cites four anonymous sources close to the matter. These sources report that the investigation, to be run by federal prosecutors and the Commodity Futures Trading Commission (CFTC), will investigate how traders could have engineered prices via illegal actions like spoofing and wash trading.

Spoofing is the act of creating a large number of orders for a specific commodity, then canceling them. This practice has plagued the crypto market before, with a notable instance in 2017, when an unknown trader or possibly group of traders known only as “Spoofy” placed a large number of $1 million orders without following through the transaction.

Wash trading, on the other hand, is when a trader buys their own orders. This essentially creates the illusion of a greater market demand to attract more buyers.

Both the Justice Department and the CFTC have yet to comment on the news.

Back in March of this year, the US Securities and Exchange Commissions (SEC)had also launched its own probe into crypto, with several crypto-centric companies, such as tZero, a subsidiary of the BTC-friendly Overstock.com, coming under scrutiny.

Just this month, US and Canadian regulators launched what they dubbed “Operation Crypto Sweep“, a joint operation to catch fraudulent cryptocurrency investment schemes.

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