Cryptocurrency Industry Experts Support DOJ’s Inquiry in Bitcoin Price Manipulation
On Thursday, May 24, the U.S Department of Justice (DOJ) launched a probe on the speculation of Bitcoin price manipulation in the market by some traders. The agency was looking out in the possibility of occurrence of illicit practices of ‘spoofing’ and ‘wash trading’ done in order to influence the investors of the crypto markets.
Following the news of the inquiry, the cryptocurrency markets reacted quickly adding further woes to the continuously falling Bitcoin prices. On Thursday, Bitcoin price corrected by nearly 4-5% taking the price of the cryptocurrency below $7500.
Although the Department of Justice has yet to release the reports of the investigation, many of the cryptocurrency experts from the industry were seen backing this move. Most of them have the view that such inquiries help to remove bad players from the industry thereby creating an environment of fair and healthy trading practices for serious investors.
Speaking to Bloomberg, Hedge Fund manager and billionaire investor Mike Novogratz said that he welcomes this investigation. He said: “Weeding out the bad actors is a good thing, not a bad thing for the health of the market.” Further citing his own experience to trade, he said: “Plenty of exchanges have these inflated volume numbers to create some sense of excitement around coins.”
Co-founder of the Gemini exchange Cameron Winklevoss shared similar views stating “We welcome any inquiry that serves to foster rules-based marketplaces and deter bad actors.” Last month in April, Gemini had already taken its move to remove bad players by announcing its partnership with Nasdaq. As a part of this partnership, Gemini will be using Nasdaq’s surveillance technology with real-time tracking to flag any unusual trading patterns.
Long-time Bitcoin bull and founder of Fundstrat Global Advisors - Tom Lee - said: “This is really welcome news ultimately because this means there is adult supervision coming/here.”
Spencer Bogart of cryptocurrency hedge fund Blockchain Capital said, given that even the most regulated markets are immune to fraud, he wouldn’t be surprised if DOJ unearths any existence of actual fraud.
In an email, Bogart said: “I don’t have any first-hand evidence of manipulation of Bitcoin prices but given that even the most highly regulated and most liquid markets in the world (e.g. Libor, FX markets, commodities) have consistently proven to be manipulated, it wouldn’t be a huge surprise.”
Themis Trading LLC partner and co-head of equity trading Joseph Saluzzi said: “The issue is that there is no one regulator monitoring the underlying exchanges and therefore there is no way to know if manipulation like spoofing is going on. Some exchanges will say that they have information sharing agreements with each other, but again this is not enough to ensure that manipulation is not occurring. As we have seen in the equity market, exchanges are for-profit and cannot be trusted to police themselves.”