Whale Watching: US Regulators Open Probe on Suspected Market Manipulation
Cryptovest
Published May 25, 2018 01:44AM ET
Updated May 25, 2018 02:01AM ET
Whale Watching: US Regulators Open Probe on Suspected Market Manipulation
In cryptocurrency trading, it has always been known that large entities could sway any market. When it comes to altcoins trading against Bitcoin (BTC) , there are enough large-scale Bitcoin holders that can steer the price in any direction.
https://twitter.com/chrisL23406329/status/999722970611249152
The US Justice Department has started a criminal probe into market manipulation behavior, such as spoofing, flooding the market with orders, or posting fake orders that are then pulled back. The crypto market has absolutely no regulations on market behavior, which has caused dramatic, artificial-looking appreciation of BTC, with $1,000 per day not an unusual occurrence.
Federal prosecutors are working with the Commodities Futures Trading Commission (CTFC) to estimate the level of market fraud.
https://twitter.com/giancarloCFTC/status/999102853028438016
But in 2018, it may be very difficult to put out a rationale for punishing moves in crypto trading. Most exchanges have turned to crypto-only deals, relying on fixed-price tokens or native exchange tokens. Since crypto coins are unregulated, it is unknown what rules could be placed for crypto-only exchanges. BTC prices are a bit less volatile, with fluctuations within 5%, which at these prices is still significant.
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The current investigation will look at trading strategies that create a false price movement. Spoofing - placing and pulling multiple orders, may cause other market participants to place their own orders. Wash trading - when a trader places and fulfills their own orders to lift the price, will also see scrutiny.
“There’s very little monitoring of manipulative trading, spoofing and wash trading,” said John Griffin, a University of Texas finance professor who has studied the crypto market.
During the rapid appreciation of Bitcoin in 2017, the crypto community watched as “Spoofy”, a trader or a group of traders on the Bitfinex exchange. “Spoofy” has placed orders worth up to $1 million, later cancelling them. Some believe it was the exchange itself that performed those moves to boost the BTC price.
https://twitter.com/SplitJones/status/999692057252974592
In the latest market downturn, BTC has settled well This article appeared first on Cryptovest
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