US Dept. of Justice Investigating Potential Criminal Crypto Trading Tactics
The US Department of Justice is conducting a criminal investigation into cryptocurrency traders who may have manipulated the market, Bloomberg reports.
The DOJ is being joined by the Commodity and Futures Trading Commission (CFTC) in the probe, which uses some traditional financial industry manipulations to affect prices.
Bloomberg reports that one part of the investigation is focused on spoofing, wherein large volumes of phony orders are placed to pump up investment activity. That may have affected bitcoin and ether pricing.
The cryptocurrency industry is currently under-regulated, leaving it susceptible to tactics that more highly scrutinized markets like stocks have largely eliminated.
Another tactic being used is so-called “wash trading,” wherein someone trades with themselves to create an impression of market demand. That tactic is also driving bitcoin and ether trading, sources told Bloomberg.
The DOJ and CFTC have so far not responded on the report.
