Mainstream cryptocurrency supporters appear unfazed by the news that the US Department of Justice has launched a criminal investigation into possible price manipulation of digital currencies.
Billionaire investor Mike Novogratz said that he is not surprised by this development, and that he welcomes the initiative of the US Department of Justice.
“Tackling bad actors is very good for the overall health of the market,” Novogratz said in a telephone interview. “Many exchanges have outright inflated volumes, which are used to create hype around tokens.”
These thoughts were also echoed by Cameron Winklevoss, president of the Gemini crypto exchange. Bitcoin's biggest bull praised the move as the start of long-awaited regulations.“We support any investigation that serves the purpose of developing the market and eliminating bad actors,” one of the twins wrote in an email.
The investigation should shed light on how accurate reported volumes are on exchanges, and whether traders are using illegal methods to push prices upward.
After news of the investigation was published, the price of Bitcoin fell by almost 4.3% to $7,267. The cryptocurrency market has been under pressure all year as regulators clamped down on the sector, partly due to issues raised in the Justice Department investigation.
Spencer Bogartof cryptocurrency hedge fund Blockchain Capital said he would not be surprised if regulators found instances of fraudulent activity, since even the most high-profile markets are not immune to it.
“I have no direct evidence of manipulation.” price of Bitcoin, however, I take into account that even the most regulated and most liquid markets in the world (for example, Libor, FX) are constantly subject to manipulation,” Bogart said.
Many market participants have already made their own statements about the flourishing of manipulations in the cryptocurrency market. Earlier this year, trader Sylvain Ribes began studying trading volumes on most small exchanges, after which he wrote a post on Medium in which he said he believed that more than $3 billion of the total volume of crypto assets was fabricated. Last year, a blogger several times pointed out the actions of a certain “Spoofy” - the nickname of a trader or group of traders who allegedly placed orders for a million dollars, but did not execute them..
Joseph Saluzzi, co-founder of Themis Trading LCC, stated the following in a telephone interview:
“The fact is that no regulator controls the major exchanges, so there is no way to know about the manipulation that is happening. Some exchanges will claim that they have agreements to exchange information with each other, but again, this is not enough. As we can see in the securities market, non-profit exchanges cannot be left to the police alone.”
Read also: "Honest Coinmarketcap claims that the original is lying"
According to https://www.bloomberg.com
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