DOJ opens criminal probe into bitcoin price manipulation: report

DOJ opens criminal probe into bitcoin price manipulation: report
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The Department of Justice (DOJ) has opened a criminal investigation into whether traders in some cryptocurrency markets are using illegal tactics to manipulate the price of digital currencies like bitcoin, Bloomberg News reported Thursday.

The investigation will examine whether traders are seeking to influence the value of digital currencies by engaging in illegal practices that could prompt others into buying or selling from their online wallet, four sources familiar with the matter told the news outlet.

As part of the probe, sources told Bloomberg that the DOJ is teaming up with the Commodity Futures Trading Commission (CFTC), an agency that oversees derivatives markets. 


U.S. authorities are concerned that fraudsters are manipulating the nascent, unregulated virtual markets by sending up or shooting down the currencies' price valuations to make a profit.

Investigators are looking to see whether traders are exploiting the markets with tactics like spoofing of wash trades. Spoofing is when a trader makes a series of orders, but then cancels them after the price moves in the direction they want.

The other practice, wash trades, is when a trader only trades with him or herself in order to create the false illusion of market demand — a move that aims to draw more people to invest as well.

The investigation, which is in its early stages, will be looking to find traders employing these fraudulent practices in popular cryptocurrency exchanges like Bitcoin and Ether, according to the report.

A Justice Department spokesman declined Bloomberg's request for comment and CFTC officials did not respond to their requests for comment.

As cyber thieves continue to target virtual currencies, which have spiked in value, questions have increasingly arisen over how the government should regulate the growing industry, particularly because dozens of such platforms are scattered around the world.

While many digital trading platforms are not registered with the CFTC or the U.S. Securities and Exchange Commission, they agency can still issue sanctions if fraud is detected in some of the crypto-spot markets.