The Department of Justice has launched a probe into bitcoin price manipulation, according to a Bloomberg report today. The report, which cites four anonymous sources, says the DOJ – with the cooperation of the Commodity Futures Trading Commission (CFTC) – is looking at whether spoofing has been used to influence bitcoin prices. The CFTC regulates bitcoin futures.
Spoofing is when someone uses fake transactions to trick others into buying and selling. The price of bitcoin dropped briefly when news of the probe broke, but has since rallied. As of 3:55 p.m. ET, bitcoin is trading at $7,595.78. That’s a 0.05% increase from that same time on Wednesday.
In terms of the bigger picture, the cryptocurrency market has known greater regulations are coming. The regulatory uncertainty facing bitcoin has been one of the biggest drags on its price this year. If this probe is one of the catalysts that creates a fair regulatory environment for bitcoin and all cryptocurrencies, then the entire market will benefit.
As always, we’ll keep you posted.
Senior Managing Editor, First Stage Investor