It feels like cryptocurrencies like Bitcoin are going mainstream. They're becoming more heavily regulated around the world, in diverse places like Japan and New York. Now people are being investigated for price fixing. According to Bloomberg, the US Justice Department has opened a private criminal probe into traders who may be manipulating the price of Bitcoin and other digital currency products.
Bloomberg's sources said that the investigation will focus on practices that have essentially been regulated out of futures and equities markets. Traders submit false orders and cancel at the last moment (spoofing) or trade heavily with themselves to create a fake impression of demand (wash trading). Both practices are illegal. Bloomberg also notes that virtual currencies can be ripe for fraud as evidenced by wild price swings, a fragmented trading presence and a lack of regulations (until now). The Justice Department is working with cryptocurrency regulator, the Commodity Futures Trading Commission, in its investigation.
- This article originally appeared on Engadget.