Bitcoin price manipulation probe underway at Justice Department

The US Department of Justice is investigating possible cryptocurrency price manipulation, at least according to sources that have leaked the probe. According to the tipsters, the DOJ has teamed with the Commodity Futures Trading Commission (CFTC) to determine whether some traders have or had been manipulating the price of cryptocurrencies like bitcoin. The sources say this is a criminal probe.READ: What is Bitcoin? Let AI explain

The investigation was leaked by sources talking to Bloomberg, which reports that both federal prosecutors and the CFTC are looking into whether some traders have been engaging in various illegal schemes to alter crypto prices.

These methods include things like pushing out a flood of fake orders to manipulate other traders into either selling their cryptocurrencies or buying up existing currencies. Such manipulation tactics are illegal and come with stiff penalties.

A lack of regulations make cryptocurrencies particularly susceptible to such tactics. Some nations have taken major steps toward restricting or outright banning cryptocurrencies for these reasons and others. Japan, for example, has started regulating currencies like bitcoin, while China has simply banned them.

The sources claim that spoofing and wash trading schemes are of particular interest to the DOJ, which is giving focus primarily to bitcoin and ether. However, the probe is reportedly still in its early stages and it's unclear whether it will lead to any sanctions. Neither government agency has confirmed the report at this time.

SOURCE: Bloomberg