Published: Wed, June 13, 2018
Markets | By Otis Pena

CFTC moves forward with crypto price probe, demands info from exchanges

CFTC moves forward with crypto price probe, demands info from exchanges

"Perhaps more impactful is the news that U.S. government investigators have ordered four major cryptocurrency exchanges - including Coinbase and Kraken - to hand over comprehensive information regarding trading in order to aid in its investigation over potential price manipulation", Crypto Experts wrote on Twitter.

According to a The Wall Street Journal report on Friday, the financial market regulator is demanding comprehensive trading data from Bitstamp, Coinbase, itBit and Kraken, which altogether serve as a base for the bitcoin futures price listed by CME Group. Several exchanges chose not to comply, claiming CME's request was invasive.

"All participating exchanges are required to share information, including cooperation with inquiries and investigations", said a CME spokeswoman in the report.

Above mentioned four crypto exchanges have been those that were requested by CME. When CME amended its request to a few hours' worth of trading, the exchanges gave some data from a few participants. CME compiles trading data from four major exchanges to derive the final value. If there was such a clause, then all data pertaining to trading such as date and time of all trades, unfilled or cancelled orders, identities of traders, and size of orders would be available to CME on a then and there basis.

The CFTC, which had supported the bitcoin futures' introduction which they saw as risky but worthwhile, became frustrated and subpoenaed the exchanges.

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 department is said to be looking for ways in which traders can manipulate prices of cryptocurrencies through illegal activities like wash trading.

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

This past week, he commented that the concerns over price manipulation are exaggerated, and that there wouldn't be enough of a gain to justify the risk.

Bitstamp chose not to comment on the investigation, and Coinbase did not respond to a request for comment. Criticizing the strong action, Paxos (which own ItBit) CEO, Charles Casarcilla says, "We have definitely entered an unknown area where it is clear there is a desire for tightened oversight".

The largest cryptocurrency Bitcoin (BTC) was the least affected losing just a little less than 5% in the past 24 hours and was trading at $7,244. In one strategy, called "spoofing", traders make big orders to dupe others into raising their buy price, enabling the spoofer to sell at a higher price.

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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