Bitcoin and other cryptocurrencies have been on a wild ride over the past few months with significant price volatility that may have made some people a lot of money but it would have certainly cost a lot of people money as well. The U.S. Justice Department and the Commodity Futures Trading Commission feel that something’s not quite right which is why they have started investigating possible price manipulation in the cryptocurrency markets.
Bloomberg reports that the U.S. Justice Department and the Commodity Futures Trading Commission have started investigating spoofing and wash trading in cryptocurrency markets. These are the types of market manipulation tactics used to influence the price of assets and happen to be illegal in conventional financial markets.
In spoofing, false orders are placed on exchanges and then withdrawn in a bid to manipulate prices. The idea is to lure other people into buying and selling. Wash trading involves participants trading among themselves to give the illusion of heightened activity in the market.
The Commodity Futures Trading Commission oversees cryptocurrency derivatives. The investigation by U.S. regulators is said to be in the early stages right now and is focused on major cryptocurrencies such as Bitcoin and Ether. Many will be interested in finding out what the investigation reveals as they do believe that price manipulation takes place in cryptocurrency markets.