The Strategist

US authorities are looking for signs of illegal cryptocurrency trading


05/25/2018 - 12:18



The US Department of Justice began a criminal investigation into cases of possible manipulation of the price of bitcoins and other major crypto-currencies. The Commodity Futures Trading Commission (CFTC) is also involved in the investigation. Among other things, it deals with the trade in crypto-currency derivatives. The authorities intend to check whether traders use illegal practices, such as placing fake orders and fictitious inflation of trading volumes.



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According to Bloomberg, referring to its own sources in the US Department of Justice, the agency launched a criminal investigation to find out whether the constant price jumps are a result of the illegal actions of traders and investors. The investigation also connected CFTC, which is responsible, among other things, for controlling the trade in crypto-currency derivatives.

The US authorities do not limit the trade in crypto-currencies in the country, only taxing the income from it. The very same trade is not regulated at the state level. As a result, there is a possibility that traders in the crypto-currency market will use the same illegal methods of profit making, which are used by players in the securities markets. But there is strict regulation only on traditional exchanges, and with illegal practices the authorities have been fighting there for more than a decade.

First of all, the authorities are looking for two types of fraud. The first of these is the placement of fictitious orders for the purchase or sale of crypto currency. For example, placing a large number of sales orders can cause a panic among market participants, who will immediately sell their assets. But in reality, operations on such orders are never carried out. Their goal is to frighten others and to knock down the rate of the crypto currency, so that then the attackers could buy it cheaper. The second type of fraud is the creation of a system of a limited number of traders who actively trade among themselves, creating the appearance of high activity in the market.

Against the backdrop of this news, the Bitcoin's rate dropped by about $ 400. Now, according to Coinbase, it is trading at a mark of $ 7,350.

source: bloomberg.com