US Justice Department Begins Criminal Investigation of Bitcoin Manipulation

The US Justice Department has launched a criminal investigation into Bitcoin price manipulation, according to a Bloomberg report which cites four people familiar with the matter. There is as yet no official confirmation.

A single bitcoin is currently worth $7,372, and the network has a market capitalisation of $125.7 billion, according to coinmarketcap.com. Over the last month, there has been a general decline in price, as can be seen in the graph below.

Reportedly, the authority is working with the Commodity Futures Trading Commission, an American financial watchdog, and focusing on illegal practices such as spoofing. This is when market optimism/pessimism in a commodity is generated by way of large numbers of fake orders. This affects market activity and thus the price of that commodity.

One example of spoofing was at Citigroup - between 2011 and 2012 its employees flooded the market with fake orders on more than 2,500 occasions. The practice was systemic, involving a number of employees working together to bring profit to the bank by manipulating the market.

The Dodd-Frank Act (now being repealed) gives the CFTC power to police this practice - it was this authority that eventually fined Citigroup $25 million.

The CFTC is also the body that regulates Bitcoin derivatives in the US. According to the report, federal prosecutors are working with this agency in its investigation. The Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term being examined include Ethereum.

Because Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term of cryptocurrency is at best partial in most places in the world, dishonesty is prevalent. There have been claims that the largest cryptocurrency exchange in the world is falsifying its numbers (which it denies), allegations of pump and dump schemes, accusations of insider trading at another major exchange - you name it.

John Griffin, a University of Texas finance professor, said: “There’s very little monitoring of manipulative trading, spoofing and wash trading. It would be easy to spoof this market.”

For these reasons, the CFTC has asked for surveillance of two major traditional financial exchanges that now serve Bitcoin futures to avoid criminal activity.