DOJ launches massive criminal probe into Bitcoin price manipulation and fraud
05/28/2018 // Ethan Huff // Views

Are certain malicious entities committing mass fraud in order to manipulate the price of Bitcoin and other cryptocurrencies? That's what the United States Department of Justice (DoJ) is currently looking into as part of a new criminal probe into crypto crimes.

The investigation comes on the heels of complaints by crypto critics that crypto markets are being scammed by savvy traders who know how to "spoof" the trading platforms and flood them with fake buy and sell orders. Such crimes can drive the price of a crypto way up, or cause it to plunge way down, apart from natural market forces.

It isn't exactly a good thing for the reputation of cryptocurrency in general, which requires honesty, transparency, and accountability if people are going to trust using it. That the crypto world is essentially rife with misconduct at this current juncture is precisely why the DoJ is now getting involved, along with the help of the Commodity Futures Trading Commission (CFTC), which oversees derivatives specifically tied to Bitcoin.

While crypto exchanges are expected to go after these bad players themselves, this obviously doesn't always happen – hence the DoJ involvement. And with all of the crazy price swings with Bitcoin over the past year, many say there isn't a better time than now for regulators to start cracking down and cleaning up the crypto world.

What the DoJ is specifically focused on are spoofing and wash trading, two forms of cheating that regulators have been working for years to eradicate from both the futures and equities markets. Spoofers essentially submit a spate of orders that they then cancel after prices have moved in the desired direction. Wash traders basically trade with themselves, which creates an illusion of artificial market demand, again in order to manipulate prices.

These criminal elements within the crypto trading world likely explain why Bitcoin rose from around $1,000 in early 2017 to almost $20,000 by the year's end. As of this writing, the price of Bitcoin is hovering right around $7,500.

Finance professor says committing crypo fraud is "easy"

It's the mom and pop investors who are being hit the hardest by these scams, as many of them assume the crypto markets are regulated in a similar manner to traditional money markets. Natural supply and demand, in other words, isn't necessarily at work when it comes to crypto trading, and it's the price manipulators who are largely to blame, critics say.

The U.S. Securities and Exchange Commission (SEC) is also cracking down on crypto crimes, with its own investigation into rampant fraud with initial coin offerings, or ICOs, which are basically digital tokens that some up-and-coming companies offer to investors in exchange for their investments.

Because the concept of cryptos is still so new, regulators haven't yet figured out how to properly keep tabs on which ones are real and which ones are fake. This is especially problematic with fly-by-night ICOs, many of which have defrauded investors of tens of millions of dollars.

Another problem is that many crypto trading platforms still aren't registered with either the CFTC or the SEC, which means they could disappear in an instant, along with the money of everyone who used them to make an investment.

"There's very little monitoring of manipulative trading, spoofing, and wash trading," says John Griffin, a University of Texas finance professor who studies manipulation, including that of digital coin markets. "It would be easy to spoof this market."

One of the most well-known examples of this is a trader, or group of traders, widely known as "Spoofy" that allegedly placed orders as high as $1 million, only to not execute them, thus driving the price of crypto toward Spoofy's desired target.

Read for more coverage of the coming Bitcoin collapse.

Sources for this article include:

Take Action:
Support Natural News by linking to this article from your website.
Permalink to this article:
Embed article link:
Reprinting this article:
Non-commercial use is permitted with credit to (including a clickable link).
Please contact us for more information.
Free Email Alerts
Get independent news alerts on natural cures, food lab tests, cannabis medicine, science, robotics, drones, privacy and more.
App Store
Android App
eTrust Pro Certified

This site is part of the Natural News Network © 2022 All Rights Reserved. Privacy | Terms All content posted on this site is commentary or opinion and is protected under Free Speech. Truth Publishing International, LTD. is not responsible for content written by contributing authors. The information on this site is provided for educational and entertainment purposes only. It is not intended as a substitute for professional advice of any kind. Truth Publishing assumes no responsibility for the use or misuse of this material. Your use of this website indicates your agreement to these terms and those published here. All trademarks, registered trademarks and servicemarks mentioned on this site are the property of their respective owners.

This site uses cookies
Natural News uses cookies to improve your experience on our site. By using this site, you agree to our privacy policy.
Learn More
Get 100% real, uncensored news delivered straight to your inbox
You can unsubscribe at any time. Your email privacy is completely protected.