The US Justice Department launched a criminal investigation into crypto market manipulation, adding yet another layer of scrutiny which the United States are directing to digital currencies. Investigators and traders/investors seem to share the same sentiment that crypto markets are overrun with misconduct.
The investigation, which will be conducted by federal prosecutors in cooperation with the Commodity Futures Trading Commission (CFTC), is focused on illegal practices that can influence prices, one of the more common being “spoofing”, which involves flooding the market with fake orders to trick other traders into buying or selling.
Exchanges will likely be examined as unwilling, but complicit, actors in the alleged manipulation. Most crypto exchanges lack internal policy and/or external oversight to keep market manipulation under control.
The situation presents the catch-22 that the crypto community is all too familiar with: unregulated markets are great, until they’re not...