Bitcoin Price Manipulation Probe Linked to Futures Market

4 Bitcoin Exchanges Must Turn Over Comprehensive Information in Manipulation Investigation

The U.S. Commodity and Futures Trading Commission (CFTC) has reportedly subpoenaed four cryptocurrency exchanges in a bid to obtain their trading data as part of an investigation into market manipulation.

The Wall Street Journal claims that the CFTC's investigation was spurred by a lack of responsiveness to requests from CME that Bitstamp, Coinbase, Itbit, and Kraken to provide trading data back in January.

The investigation comes after the derivatives marketplace CME Group Inc. began offering BTC futures trading in December. Several exchanges chose not to comply, claiming CME's request was invasive.

CME spokeswoman, Laurie Bischel, stated: "All participating exchanges are required to share information, including cooperation with inquiries and investigations". All the four exchanges refused to provide data to this London-based company which is supposedly having its on cryptocurrency exchange. These agreements would detail what information needed to be shared, including traders' identities and the time of trades. The issue of the legal instrument to these exchanges makes it compulsory for them to respond with necessary data.

Last month, it was reported that the U.S Justice Department had launched a criminal probe into whether the bitcoin and cryptocurrency markets the subject of manipulation and misconduct, citing "four people familiar with the matter".

The CFTC was moved by the dispute over sharing the trading data to investigate whether or not there was collusion to manipulate the prices, the sources said.

CME's agreement with the private exchanges does not have a clause to share trading data.

CME Group
Dispute Between CME, Crypto Exchanges Prompted CFTC Market Manipulation Probe: Report

CME and the CFTC are expected to monitor trading for that hour to determine whether individual trades distort the futures price.

Neither Bitstamp nor Coinbase commented on the matter.

Jesse Powell chief executive of the Kraken exchange told the WSJ that the "newly declared oversight" of how BTC prices form futures prices "has the spot exchanges questioning the value and cost of their index participation". "If there is any kind of attempted manipulation, whoever is doing it is taking a huge amount of risk for very little possible upside".

"We have definitely entered an unknown area where it is clear there is a desire for tightened oversight."

At the time, Attorney General, Eric T. Schneiderman had said, "With cryptocurrency on the rise, consumers in NY and across the country have a right to transparency and accountability when they invest their money".

Per the report, the probe saw government investigators demand the exchanges hand over trading data, to find out whether cryptocurrency prices are being manipulated or not. In spoofing, traders submit large orders that cause other traders to raise their buy price which, in turn, allows the spoofers to sell at higher prices.

According to crypto news portal, Bitcoin News, since bitcoin is counted as a commodity, it technically falls under the CFTC's jurisdiction.

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