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Market Price Manipulation Being Investigated By The Department Of Justice

The USA Department of Justice officials finally have turned their eyes to the cryptomarket. This morning, it was revealed that the Department of Justice in conjunction with the Commodity Futures Trading Commission, the derivatives contracts watchdog, are investigating possible manipulation of cryptocurrency prices through old, but still effective methods. This was revealed by sources that preferred not to be identified, according to a report published by Bloomberg.
Supposedly, one of the factors that originated this investigation was the extreme volatility that has been in the cryptocurrency prices since December last year. Bitcoin has shed more than 70% of the value that once had, and with it all the cryptocurrency market. But the surprising fact is that is the CFTC, and not the Securities and Exchange Commission (SEC), that is spearheading the oncoming investigation. The SEC has also been probing the Initial Coin Offering Markets since the market was flooded with complaints about misleading offers and scams earlier this year.
The price manipulation schemes supposedly will try to find if some old techniques that had been used to manipulate prices in the stock market before are being used in the cryptocurrency market. Principally, two of these are mentioned.
Spoofing is the name given to a market manipulation method that consists in filling the market with fake buy or sell orders to move the market in a wished direction. Then when a certain price goal is reached, the fake orders are retired. The other method mentioned in the report is wash trading, a market manipulation scheme in which a trader buys and sells the same stock or contract, to create a false impression of a growth in demand of the stock in the market. This causes other investors to buy the stock with possible loses.
Experts say that the rising volume of trade coming from newbies, and the poor regulation and oversight of the market stance could make it susceptible to this kind of manipulations. The fragmentation of the market and the emergence of new cryptocurrencies also help to create this situation.

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