Bitcoin investigated for price manipulation by the US Department of Justice


We are all familiar with the volatility of the of the crypto market and how prices can dramatically go up or down in a short amounts of time. This has been in the mind of anyone who is trading cryptocurrencies and plans its moves and strategies on the crypto exchanges.

Many people had also questioned the volatility of the market sometimes blaming it on the big whales that hold huge amounts of Bitcoins or any of the top coins. But now we face a completely different type of situation where this is not just someone on the internet making comments.

The United States Department of Justice had started an investigation into a possible price manipulation of Bitcoin and other cryptocurrencies prices.

Investigation is concentrated on illicit practices like “spoofing” which is a market over ordering and filling it with fake orders that are then canceled later in order to manipulate traders into buying or selling a particular coin and “wash trading” which means when one is trading with itself in order to wrongly suggest a bigger market demand than there really is.


There have always been numerous forms of cheating that have existed before in the traditional markets, but the crypto’s lack of regulation has given more strength to these old scams and a new place to thrive.

The Federal prosecutors on this investigation are cooperating with the Commodity Futures Trading Commission which is a regulator for derivatives tied to Bitcoin. All the worry is concentrated in the matter that cryptocurrencies are susceptible to fraud for multiple reasons such as skepticism about crypto exchanges pursuing cheaters, enormous price swings that could push valuations around and the most important, lack of regulations like the traditional financial markets have.

Since the news of this investigation had emerged the price of Bitcoin had plunged down even further as now being almost 20 percent down since its peak in May 4.

Themis Trading LLC’s partner and co-head of equity trading Joseph Saluzzi has supported the investigation stating:

“The issue is that there is no one regulator monitoring the underlying exchanges and therefore there is no way t know if manipulation like spoofing is going on. Some exchanges will say that they have information sharing agreements with each other, but again this is not enough to ensure that manipulations not occurring. As we have seen in the equity market, exchanges are for-profit and can not be trusted to police themselves.”

After the surge to almost 20,000 dollars in late 2017 from below 1000 dollars at the start of the year, Bitcoin has prompted regulators to start thinking about the risks that people were undertaking when trying to trade cryptocurrencies. There have been numerous investigations opened by the Securities and Exchange Commission on a few ICO’s that had offered their digital tokens that later can be redeemed for services and goods, that were under suspicion that they might be scams.

The Commodity Futures Trading Commission does not have control over trading of actual tokens or coins but rather than futures only, anyhow if they uncover fraud in these markets they do have the authority to inforce sanctions.