Have cryptocurrency traders been manipulating the market? The U.S. Department of Justice (DOJ) thinks so, and has launched an investigation to determine if it is correct. The agency is putting the entire cryptocurrency industry under the microscope following critical remarks that the markets are replete with questionable conduct.
The DOJ is said to be looking into certain practices that affect prices, including the flooding of the market with fake orders in an attempt to convince investors to sell or buy more cryptocurrency, Bloomberg reported, citing sources with knowledge of the investigation. Prosecutors are said to be communicating with the U.S. Commodity Futures Trading Commission (CFTC) to facilitate the investigation. No official announcement has been released so far about the investigation.
BTC and other popular digital currencies are being scrutinized as part of the DOJ’s efforts. The agency is concerned that crypto is susceptible to fraud due to several factors, such as the active pursuit of cheaters by the exchanges, extreme volatility in the markets and the lack of regulations. Of course, throughout the history of money, the same accusations have been levied against it, as well.
After Bloomberg published the news of the investigation, BTC took another drop in value. It is now trading at around $7,530 and has dropped 20% since its most recent high on May 4. Bitcoin Cash (BCH) hasn’t performed any better, dropping 28% in the past month. However, compared to BTC, BCH is currently on the upswing over the past 24 hours.
It has been pointed out before that regulations, like those implemented in Japan, could actually foster better confidence in cryptocurrencies. Although the markets are down significantly this month, cryptocurrency still is managing to attract a growing amount of investors and enthusiasts and a larger number of product offerings by the world’s financial institutions.
Spoofing and wash trading, both forms of cheating, are being postulated by the DOJ as the schemes used to manipulate the cryptocurrency markets. In a not-so-small bit of irony, both have been a thorn in the DOJ’s side for a number of years in futures and equity markets.
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