The U.S Justice department reportedly opened a criminal investigation into price manipulation of major cryptocurrencies like Bitcoin and Ethereum. The department believes that some traders are intentionally spoofing and flooding the market by placing fake orders.
The investigation is coordinated with the crypto regulator, Commodity Futures Trading Commission.
After Bloomberg first reported the news, price of Bitcoin fell more than 6 percent to $7,339, according to major crypto exchange Coinbase.
The Bloomberg reported:
“The illicit tactics that the Justice Department is looking into include spoofing and wash trading — forms of cheating that regulators have spent years trying to root out of futures and equities markets, the people said. In spoofing, a trader submits a spate of orders and then cancels them once prices move in a desired direction. Wash trades involve a cheater trading with herself to give a false impression of market demand that lures other to dive in too. Coins prosecutors are examining include Bitcoin and Ether, the people said.”
Bitcoin reached its all time high $19.783 in December last year and ignited a crypto frenzy all around the world. Many novice investors jumped on the crypto bandwagon, investing in Bitcoin without much thinking. However, the cryptocurrency then took a deep dip, causing all the investors to lose thousands of dollars.
The Bitcoin market has no proper restrictions and that’s what creates most of the problems. After the crypto market plummeted last year, regulators and governments have started taking notice of the issue. Many governments have banned ICOs while many have shuttered down crypto exchanges.
For example, China has imposed strict laws over crypto trading. Recently, the Chinese government closed down some 600 Bitcoin mining computers after a suspicious spike was noticed in the value of the digital currency.
Apart from money loss, cryptocurrencies are also associated with a number of illegal activities like money laundering, tax evasion and terrorist funding.
Big names in the tech industry have publicly opposed cryptocurrencies while companies like Google and Facebook have banned crypto-related ads from their platforms.
Volatility is the main characteristic of Bitcoin and other altcoins. For a day you will witness all the cryptocurrencies skyrocketing, while the next day they will be coming down simultaneously.
So now that the news of the investigation has caused Bitcoin to lose value, let’s see what news comes next to cause the cryptocurrency surge again.