US Regulators Investigate Cryptocurrency Market Manipulation

Cryptocurrency Market Manipulation

Bloomberg is reporting that the CFTC or Commodities Futures Trading Commission has begun a criminal investigation into cryptocurrency market manipulation, including Bitcoin and Ethereum. The CFTC is one of the most influential regulatory agencies in the United States, and the move indicates the direction they are moving towards in crypto regulation.

The market manipulation includes spoofing and wash trades. Spoofing is where an individual or group put out fake orders to entice a market move. The orders are never executed and canceled once the price moves in the intended direction.

The CFTC would have jurisdiction over any transaction that would have occurred in the US and would have the authority to impose sanctions as a result of this activity. Cryptocurrency brokers have been hesitant in accepting clients from the United States since US regulators have taken such an aggressive stance. The US market now poses a significant regulatory risk for Cryptocurrency brokers.

Cryptocurrency markets have been highly susceptible to market manipulation as we earlier reported with the pump and dump schemes that were operating out in the open.

Cryptocurrency market manipulation is now one of the most significant hurdles for Cryptocurrencies going forward. Since the market is entirely decentralized and offered through independent exchanges oversight of these activities is very challenging.

Nonetheless, the CFTC and Justice Department are making a statement that it will do all it can to make sure market manipulation will not be tolerated.