The United States Department of Justice is now investigating whether some traders of bitcoin and other cryptocurrencies are manipulating the prices.
The investigation, which is still in an early stage, focuses on suspicious illegal activities that affect the prices of cryptocurrencies. For example, “spoofing” could be one. That is when someone tricks someone else to buy or sell a cryptocurrency by placing fake orders, Bloomberg News reports.
Federal prosecutors are now working with the Commodity Futures Trading Commission, a financial authority keeping track on derivatives linked to bitcoin. All this according to four people referred to by Bloomberg News and who wish to remain anonymous.
The US authorities are worried that cryptocurrencies are exposed to fraud for several reasons. These reasons are, among other things, skepticism about whether crypto exchanges actually try to detect cheaters, but also on the fact that prices swing a lot up and down, which makes it easier to manipulate prices. They are also worried about the lack of regulations, Bloomberg News writes.