The US Department of Justice (DOJ) has opened a criminal investigation into illicit trading and price manipulation in Bitcoin (BTC) and Ethereum (ETH).
Citing four unnamed sources “familiar with the matter,” Bloomberg reported on May 24 that the DOJ is working with the Commodities and Futures Trading Commission (CFTC) to probe cryptocurrency traders for illicit activities and price manipulation.
According to Bloomberg’s unnamed sources, the DOJ and CFTC are investigating illegal trading behaviors such as spoofing, or sending in massive orders and canceling them, and wash trading or “trade” conducted between accounts of the same trader. Such actions are prohibited under criminal law and have largely been stamped out in equities and derivatives trading.
One example of illicit cryptocurrency trading highlighted by Bloomberg emerged last year when a trader or group of traders nicknamed “Spoofy” allegedly placed orders for $1 million of cryptocurrency but did not then execute them.
US regulators have increased policing activities focused on the cryptocurrency space in 2018, with US Securities and Exchange Commission (SEC) shutting down several large initial coin offering (ICO) projects, such as the $600 million Arisebank ICO.
U.S. and Canadian regulators announced “Operation Cryptosweep” a joint investigation of cryptocurrency scams earlier this week.