United States Department of Justice (DOJ) Launches Criminal Probe in Bitcoin Price Manipulation

Bitcoin traders are now under the scanner of the U.S government as the United States Department of Justice (DOJ) has launched a criminal probe to see whether traders have been involved in any sort of price manipulation.

Citing people familiar with the matter, Bloomberg reported that this move is the part of the larger scrutiny by the U.S government in the cryptocurrency market. The sources claim that the investigation is still in the early stage and that it is focused on the illegal practices that can influence the Bitcoin price movements.

The investigation is narrowing down on the possibility of ‘spoofing’ which is a market manipulation technique used by some traders by entering false orders and deceiving other market participants in buying and selling. Another possibility which is looked out is for “wash trading” wherein the traders buy and sell among themselves in order to influence higher customer activity and generate false confidence in the market by luring and trapping other investors into the market.

This investigation is carried out jointly by the United States Department of Justice (DOJ) and the market regulator Commodities and Futures Trading Commission (CFTC). Although CFTC doesn’t regulate the crypto markets for the moment, it still has the authority to act against illegal trading practices.

University of Texas finance professor John Griffin says that the limited oversight makes the digital currency market an easy target for the crooks. He was quoted as saying: “There’s very little monitoring of manipulative trading, spoofing and wash trading. It would be easy to spoof this market.”

The possibility of Bitcoin price manipulation has been questioned long back by several cryptocurrency enthusiasts. In the last six months, the cryptocurrency has slashed by more than 60%. Bitcoin, which was trading at $20000 in mid-December 2017, is currently trading at $7417, according to our data on WorldCoinIndex.

The bearish period has seen several odd patterns on the chart that cause some critics to speculate price manipulation. There have also been several allegations of “pump-and-dump” schemes in order to create market manipulations, especially in small-scale altcoins.