You don’t need to be the biggest cryptocurrency expert to be aware of the fact that groups of investors are constantly trying to manipulate the prices of various coins or tokens, for their own financial advantage.
Bitcoin, being the world’s biggest coin, in terms of market cap, has been the target of this numerous times. Currently, the United States Department of Justice is investigating one of these attempts, as they just opened a criminal probe into price manipulation, where other currencies were also targeted.
Various fraudulent techniques were used
According to The Verge, citing a report from Bloomberg, the investigators are trying to detect practices of spoofing, which imply filling the marketplace with fake orders, then cancel them later, in order to manipulate others to buy or sell a specific coin.
Another price manipulation technique is wash trading, which implies trading with oneself in order to falsely imply a bigger market demand that there actually is.
All these are forms of cheating, present on financial markets for years. Considering that cryptocurrencies aren’t properly regulated or monitored, the scammers have just found new places where they can try these.
More organizations, working alongside to stop this
The Department of Justice is working alongside Commodity Future Trading Commision, which looks over and regulates cryptocurrency derivatives in the investigation. The problem with this is that the CFTC can only regulate futures based on coins, which the actual trading of coins can’t be controlled by them.
Basically, this last aspect can change only if the investigation confirms the price manipulation fraud.
This isn’t the first time the DOJ launches such an investigation, in order to detect any shady Bitcoin practices. Besides this, it’s been a few months since the SEC is struggling to regulate specific ICOs. They have reached the point in which they created a fake ICO, just to warn about this problem, but also announced any celebrities who want to endorse initial coin offerings about the possibility or promoting a fraud. Floyd Mayweather and DJ Khaled are just two of those who did this in the past.