As Bitcoin and other crypto prices plummet, US federal prosecutors have homed in on suspicions that a link between Bitcoin, Tether and crypto exchange Bitfinex might have been used to illegally move prices. Photo: US Department of Justice
New York’s attorney general has announced an $850 million fraud investigation into the Hong Kong-linked cryptocurrency Tether. Photo: US Department of Justice

The value of most major crypto-currencies continues to dip as Bitcoin yesterday moved close to the $7,000 milestone price point. The continued price slide comes on the back of news that the US Department of Justice has opened a criminal probe into whether traders are manipulating the price of digital currencies.

Federal prosecutors are working with the Commodity Futures Trading Commission, a financial regulator with responsibility for overseeing Bitcoin derivatives, with Bloomberg reporting that the Department of Justice is examining allegations of both ‘spoofing’ and ‘wash trading.’

In spoofing, a trader submits a spate of orders and then cancels them once prices move in a desired direction, while wash trades involve a trader giving a false impression of market demand by creating trades with themselves.

Last week crypto market data site Coinmarketcap estimated that the total value of all coins fell to about $325 billion, down by more than $50 billion after another US agency formally launched its “Operation Crypto-sweep” task force.

The North American Securities Administrators Association says its members have already carried out 70 investigations since April and that the actions, into crypto-currency scams and fraudulent ICOs, is claimed to be “just the tip of the iceberg.”

Operation Crypto-sweep has received the full support of the US Securities and Exchange Commission, with Jay Clayton, the Commission chairman, saying it “should be a strong warning to would-be fraudsters in this space that many sets of eyes are watching, and that regulators are coordinating on an international level to take strong actions to deter and stop fraud.”

The latest action by the Department of Justice marks the first time that both major regulator agencies responsible for US capital markets – the Commodity Futures Trading Commission and the US Securities and Exchange Commission – are now publicly involved in action countering crypto-based fraud.

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