REPORTS have surfaced that the U.S Department of Justice (DOJ) has opened a criminal investigation into some digital currency traders as they are suspected to have been manipulating the market using old-school illegal tactics.
The report which was published by Bloomberg earlier today cited anonymous sources that are close to the investigation who revealed that the probe is currently being carried out in partnership with the Commodity and Futures Trading Commission (CFTC).
According to the sources, the investigation has targeted spoofing, which is a technique used in the traditional stock and forex markets where traders make large volumes of fake orders in order to alter the price movement of a currency or a commodity. The authorities are of the view that spoofing could have possibly influenced the trades of Bitcoin and Ethereum, the industry’s two leading cryptocurrencies.
The DOJ is also investigating cryptocurrency traders who might have tricked the system by sending themselves huge volumes of orders just to create a fake increase in order demand and trick other traders and investors into purchasing a particular cryptocurrency.
This latest development is another effort by authorities in the U.S to ensure that the cryptocurrency market becomes fair given that the CFTC has given the approval to local exchanges to list bitcoin-backed futures and derivative products last year.
This report by Bloomberg also comes weeks after a commissioner of the CFTC talked about the increased scrutiny over crypto activities that have violated laws in the country by the agency.
During a conference in Washington, D.C., CFTC commissioner Brian Quintenz previously commented that the agency is pushing its attention on “fraud, market manipulation and disruptive trading involving virtual currency.”
At the moment, the sources confirmed that the investigation is in its early stages as the authorities are investigating the Bitcoin and Ethereum trading markets.
Cryptocurrency exchanges are also taking necessary steps to ensure that their platforms become more transparent. This was evident when Gemini trading platform partnered with NASDAQ to monitor all its markets for any unusual trading pattern and will make use of the surveillance technology deployed by NASDAQ.
This news also coincided with a drop in the price of the flagship cryptocurrency, which has lost roughly 5% over the past hour to trade at a monthly low of $7,260.