Bitcoin is certainly a volatile currency. However, recent developments in terms of its unstable price has led the US Justice Department to become suspicious that there could be more than meets the eye. As such, this government entity has opened a probe to try and unravel what may be going on behind the scenes in term of Bitcoin prices. The Justice department claims that some unscrupulous traders seem to be manipulating the prices of not only Bitcoin but also other cryptocurrencies.
Misconduct Galore in the Markets
According to critics, the red-hot markets in the U.S are synonymous with misconduct and as such, investigations focus on the illegal activities that are believed have the potential to influence the prices. Some of these include spoofing or flooding the currency market with fake orders that eventually trick other unsuspecting traders into selling or buying.
As a result of this development, Federal prosecutors are now working in collaboration with the Commodity Futures Trading Commission, a regulator in the financial sector that is mandated to oversee derivatives related to Bitcoin.
This is a clear sign of worry within the financial sector and government authorities that virtual currencies could be falling prey to fraud for several reasons. This is made worse by the fact that there are no set regulations such as those that work with stocks and other assets.
Bitcoin Down Even More
Bitcoin has continued with its downward trend, according to a report by Bloomberg News about the investigation. It was down 3 percent to trade at $7,409 as of 9:32 a.m. London time at the time of writing.
With these concerns being raised, it is no surprise that countries like China have now banned crypto exchanges while other countries like Philippines and Japan have introduced strict regulations. This move has further dampened the prospects that Bitcoin will have gains as it has in the recent past.
A Target for Crooks
According to John Griffin, a finance professor at the University of Texas, the fact that digital assets have limited oversight is fodder for crooks that target them for manipulation. He says:
There’s very little monitoring of manipulative trading, spoofing and wash trading. It would be easy to spoof this market.
Signs have emerged that some crypto exchanges realize the growth of the country could be held back if a large number of investors come to the conclusion that trading platforms should be approached with caution.
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Do you believe that the price of Bitcoin is being manipulated by unscrupulous traders? How viable is this? Let us know your thoughts in the comments section below.