The U.S. Department of Justice launched a criminal investigation to identify the illegal actions of traders and investors and works in conjunction with the CFTC, Bloomberg reports citing four anonymous sources. The DOJ should identify any illegal practices that are being used by cybercriminals to manipulate the digital currency market.
An unnamed source said users with the help of special illegal practices can deceive traders and convince them to purchase a given cryptocurrency. Close attention will be given to the practice of “spoofing”, which is a technique used in traditional financial markets. It consists of exposing the manipulator to a large number of applications for the purchase / sale of assets without the intention to make transactions, with the result a subsequent cancellation of these applications before their execution.
The purpose of spoofing is to gather information about supply and demand, attract market participants’ attention, create an artificial impression of trading activity, the so-called "growing" demand, and price movement of the asset. According to the investigation, spoofing could have a significant impact on the “blue chip” prices of the cryptocurrency market, including Bitcoin and Ethereum.
The Department of Justice works in conjunction with the Commodity Futures Trading Commission (CFTC). Authorities are concerned about the machinations in the digital money market, as they are not sure how actively the exchanges are those engaging in illegal practices. There is now the possibility of using such techniques in the absence of proper regulation. Combating these practices in futures and securities markets have been going on for many years.
By Ekaterina Ulyanova