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US investigates Bitcoin Price Manipulation

US investigates Bitcoin Price Manipulation

called Spoofing


According to Bloomberg, the Department of Justice has launched a criminal investigation into the ability of traders to manipulate Bitcoin and other cryptocurrency prices. It is allegedly executed in collaboration with the Commodity Futures Trading Commission, the Financial Regulator that oversees Bitcoin derivatives.

The Judiciary is currently investigating “Spoofing“ in this case. 

What is Spoofing?

The manipulation is done through a technique called “Spoofing.” This is where Traders place buy or sell orders with no intention of actually executing them. Such tactics could be used to manipulate traders and the market in general. It is an illegal activity in which an investor floods the market with fake orders to distort the price of an asset. 

A Spoofy is a trader -or a group of users- who mainly operate on Bitfinex. They place large bids for Bitcoin, which are used to manipulate the price. In most cases, this has the desired effect. If the price goes beyond their initial target, they immediately put up sell orders for $2 million or more to push the price down again. Sounds like market manipulation. The reason this group is known as “Spoofy” is because they often place orders which are never

intended to execute in the first place.


The price of Bitcoin fell to $ 7,364 on Thursday, from a high of $ 7,718. That is a decrease of 4.6 percent.

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The Bitcoin market’s meteoric rise and massive volatility has led to some countries, including China, to ban the cryptocurrency, while others scramble to regulate it. In the US, the chairman of the Securities and Exchange Commission has warned of the risks associated with cryptocurrency investment and noted that they hold substantially less investor protection than traditional securities markets.

The Justice Department declined to comment on the matter, while the CFTC didn’t respond to a request for comment.

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