Reports out today highlight that the US Commodities Futures Trading Commission (CFTC) are working with the US Justice Department to run an investigation into Bitcoin price manipulation that could be influencing the state of the markets as we see it today. According to Bloomberg, the US Justice Department have now begun a full criminal investigation into the matter. The investigation will search for evidence of spoofing and malicious market activity, that could in turn be directly influencing the state of the markets.
According to Quartz, Tether may be one such currency that is enabling the price of Bitcoin to be directly influenced. According to Quartz:
“Tethers may have been used to manipulate the price of bitcoin. One theory is that the Tether token has propped up the price of bitcoin by as much as 40% during its historic rally last year. More prosaic price manipulation methods, such as faked orders, may also affect the bitcoin price.”
See the full report from Quartz for yourself, here-
Other manipulation could exist in the form of ‘wash trading’ this is when faked orders (as mentioned above) roll through the network in order to create an environment that’s looks as if a significant amount of trading is going on. This in turn will adjust the values of the assets on the market and is of course, fraud.
You might ask yourself at this point, what is the benefit to driving prices down? Well, that’s clear isn’t it. By driving the price down, you can issue a much lower buy in price, meaning that through cryptocurrencies organic tendency to rise, you can ensure your investment will generate a profit. Essentially, by making it cheaper to buy in, criminals that are manipulating the networks are working to ensure that they get the greatest return on their investment.
Moreover, the can use manipulative techniques to drive the price both up and down, to suit their needs. Obviously, one lone entity cannot achieve this, but with hacker communities seemingly more active these days, we can’t rule out the possibility that this sort of work is being carried out.
Well the CFTC and the US Justice Department will seek evidence through analysing transactions and checking out their accountability. Should they find that manipulation has taking place, they will no doubt begin to pursue the individuals behind it. As we know though, the inherent nature of cryptocurrencies makes this very difficult and therefore, we might never really know what has been going on here.