The US Department of Justice has opened an investigation into whether traders are manipulating the price of Bitcoin (BTC) and other digital currencies, Bloomberg has reported, citing four unnamed sources familiar with the matter.
The report, which was published earlier today, states that the Justice Department is working with the US Commodity Futures Trading Commission (CFTC) to investigate illegal practices such as spoofing – a form of cheating where a trader floods the market with orders and cancels them once prices move in a desired direction. According to Bloomberg’s sources, the Justice Department is also looking into wash trading, which involves a trader buying their own orders to give a false impression of market demand that lures more buyers. The sources also said that Bitcoin and Ethereum (ETH) were among the coins examined by the prosecutors.
The news comes just a few days after US and Canadian regulators launched a large-scale effort to clamp down on fraudulent cryptocurrency investment schemes. The so called “Operation Crypto-Sweep” involves more than 40 state and provincial regulators and has so far triggered at least 70 investigations.
The US Securities and Exchange Commission (SEC) has also started its own investigations since the start of the year, focusing on initial coin offerings (ICOs) it has deemed suspicious.
Today’s report has likely contributed to the steep decline, seen across the cryptocurrency market in today’s trading. Major coins, including Bitcoin and Ethereum, have hit multiple-week lows on Thursday, although the market has seen a rebound in more recent trading. After falling to an intraday low of $7,331 in the morning, the Bitcoin price has returned above the $7,500 mark and is currently trading at $7,548.53. Meanwhile, Ethereum has rebounded from a low of $551.21, its lowest price level since April 19, and its price is now hovering around $587.91.