In the crypto space, it’s a known fact that massive entities have the power to influence the market. When it comes to altcoins that are trading against Bitcoin (BTC) there are lots of Bitcoin holders who have the ability to steer the prices in whatever direction they please. The market’s latest fluctuations led to raised eyebrows from regulators.
The US Justice Department starts a criminal probe
Everything that’s been going on with crypto market lately, erratic market prices, overheating and rapid drops, led to the US Department to start a criminal probe into market manipulation behavior including spoofing, flooding the market with tons of orders and posting fake orders that get pulled back after a while.
The crypto market is free of regulations on market behavior, and obviously this can lead to an inaccurate appreciation of BTC.
Federal prosecutors are currently working with the Commodities Futures Trading Commission (CTFC) in order to be able to estimate market’s fraud level.
On the other hand, it can turn out quite a challenge to try and punish the moves in crypto trading. Considering that most exchange platforms have turned to crypto-only deals and they are relying on fixed-price tokens or native exchange tokens, it’s pretty tricky to set a rationale for punishes. Cryptocurrencies are unregulated, and it’s unknown what rules could be implemented for crypto-only exchanges. BTC prices usually fluctuate within 5% and even if the percentage may seem small, it’s still significant.
Current investigations to analyze trading strategies
The ongoing investigations plan to examine the trading strategies that create a false price movement. Spoofing which is placing and pulling various orders may lead to other investors placing their own orders. Wash trading, on the other hand, involves traders placing and fulfilling their own orders to lift the price.
Bitcoin was rapidly appreciated back in 2017, and the crypto community had nothing else to do but watch Spoofy a trader/group of traders on the Bitfinex exchange. Spoofy paced orders worth up to $1 million and later canceled them. There are even voices claiming that the exchange itself did this and performed these moves in order to boost BTC’s price.