Considering the possibility of traders manipulating the price of Bitcoin and other cryptocurrencies, the United States Department of Justice has opened a criminal probe, according to reports from Bloomberg.
The DoJ is working alongside the Commodities and Futures Trading Commission (CFTC) to focus on illegal trading activities in cryptocurrency markets.
The investigation is built around the concept of spoofing, where an investor places a flurry of fake orders that are intended to manipulate the price of an instrument, as well as wash-trading, wherein traders sells and buys with themselves to purport heightened market activity in order to stroke confidence among other investors and lure them into the market – Thursday’s report said, citing four unnamed people familiar with the probe.
The price of Bitcoin fell at the news of the criminal investigation, dropping 5 percent in a 90-minute period to hit a low of $7,260 this month, according to Bitcoin exchange Coinbase.
The volatility in the cryptocurrency market has led to scrutiny from many national and international authorities around the world, who are struggling to figure out ways to lock down on speculative trading and illegal activities.
The investigation comes at a time when cryptocurrency exchanges have partnered with Nasdaq to monitor all markets for unusual trading patterns using surveillance technologies.