The virtual currency market needs regulations that will allow it to properly grow.
Bitcoin price manipulation probe underway at Justice Department
Another tactic is supposedly "washing", whereby a network of individuals and groups trade with each other, to give the impression that there is demand in the market for a particular type of digital currency. In spoofing, a trader submits a spate of orders and then cancels them once prices move in a desired direction. The digital currencies under examination include bitcoin and ether.
One of the most important hedge fund managers and billionaire investor, Michael Novogratz, said that the investigation that is being carried out by the U.S. Department of Justice (DOJ) is a "good thing" for the cryptocurrency market. The story, citing four people familiar with the matter, states that officials are looking at potential price manipulation of Bitcoin and other cryptocurrencies along with the Commodity Futures Trading Commission (CFTC).More news: How to download everything Apple knows about you
Last year, bitcoin saw its value explode to almost $20,000 from about $1,000 the year before as investors were lured in by the futuristic promises of the industry and, above all, greed. That's prompted regulators to grow concerned that people are jumping into cryptocurrencies without knowing the risks.
Earlier this year, the Securities and Exchange Commission launched a broad investigation into bitcoin-like "tokens" that are issued by companies through so-called "initial coin offerings".More news: Adam Levine and James Corden Get Stopped by Police on 'Carpool Karaoke'
Cryptocurrency trading is fragmented on dozens of platforms across the globe, many of which not even registered with the relevant financial watchdog. Bloomberg's sources indicated that its actually Bitcoin and Ethereum derivatives that are under scrutiny, not spot trades. Spoofing and wash trading are illegal in mainstream regulated markets such as equities and futures. "It would be easy to spoof this market". Cameron and Tyler Winklevoss have called for the creation of a self-regulatory body made up by trading platforms within the industry.
"It's pubic knowledge that these things happen, there's no oversight of the market", Marc van der Chijs, a long-time crypto investor and founder of First Block Capital, told The Post.More news: Tips to save money as gas prices soar