The US Justice Department and the Commodity Futures Trading Commission are investigating spoofing and wash trading in cryptocurrency markets, according to Bloomberg.

These are forms of market manipulation designed to influence the price of assets. They are illegal in mainstream financial markets.

A Business Insider investigation last year found that "pump and dump" scams — in which groups falsely ramp up the price of assets for profit — were rife in cryptocurrency markets.

LONDON — The US Justice Department has opened a criminal investigation into potential market manipulation of bitcoin prices, according to a Bloomberg report.

Bloomberg reported that the Justice Department was working with the Commodity Futures Trading Commission, which oversees cryptocurrency derivatives, for the investigation.

The investigation is said to focus on "spoofing" — in which false orders are placed on exchanges and then withdrawn to manipulate prices — in an attempt to lure other people into buying or selling and "wash trading," in which market participants trade with themselves to create the illusion of market activity.

These kinds of activities allow bad actors to manipulate the price of assets in their favor. Spoofing and wash trading are illegal in mainstream regulated markets such as equities and futures.

There are about 26 ways to manipulate a market, according to a study last year.

A Business Insider investigation last year found that "pump and dump" scams were rife in cryptocurrency markets. In those scams, people bid up the price of a certain crypto before selling once unsuspecting traders have been lured into the market by those inflating the price.

The US Securities and Exchange Commission subsequently cited Business Insider's investigation in a report highlighting concerns about cryptocurrency markets.

The anonymous Twitter account Bitfinex'ed, which has more than 38,000 followers, has also repeatedly drawn attention to what it calls instances of wash trading and spoofing, requesting action from regulators.

Bloomberg reports that the US regulators' investigation, said to be in its early stages, focuses on bitcoin, ether, and other major cryptocurrencies.

Business Insider interviewed a self-described pump-and-dump ringleader last year who claimed to have been involved in bitcoin price manipulation in the past but said the size of the market had made it too hard to manipulate anymore.

"We did manipulate these but now it's too hard with big market capitalization," the trader, who went by the name Nico, claimed. "Our biggest power ever has been around $5 million... [for] one of the groups."