Bitcoin (BTC) has fallen in value by more than US$1,000 over the last week, as the
US Department of Justice (DOJ) launched an investigation into cryptocurrency price manipulation.
The criminal probe announced yesterday involves the practice of ‘spoofing’, whereby traders attempt to artificially influence prices by placing fake orders designed to trick investors into buying or selling. It’s not clear if the market-wide price falls are related to the DOJ investigation.
The price drop is the latest in a downward trend that has seen bitcoin fall in value by more than US$2,000 since the beginning of May.
At press time, bitcoin is priced at a shade over US$7,500, down a fraction of a percentage point over the last 24 hours of trading.
Ethereum (ETH) is currently trading at US$596 and
Ripple at US$0.60.
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UK government watchdog joins probe into ICOs
In response to the US Justice Department’s investigation into cryptocurrency manipulations, the Britain’s top financial watchdog said it’s running enquiries into 24 businesses dealing with cryptocurrencies and has opened seven whistleblower reports related to the nascent asset class this year alone.
The move comes as regulators close in on the free-wheeling cryptocurrency industry that raised billions of dollars last year through Initial Coin Offerings (ICOs) – a method of crowdfunding with little, if any, protection for investors. US regulators have brought fraud charges against a number of these ICOs.
Responding to a
Freedom of Information (FOI) request, the
Financial Conduct Authority (FCA) said it was making enquiries into the activities of 24 unauthorised firms involved in cryptocurrencies to determine whether they might ‘be carrying on regulated activities that require FCA authorisation’.
The report added that it had opened seven whistleblower reports involving cryptocurrencies in 2018.
Moore Stephens, a London-based accountancy and consulting firm, made the FOI request.
While the watchdog organization does not regulate digital currencies, it does have purview over cryptocurrency derivatives because they’re classified as financial instruments. It also said it will regulate ICOs on a case-by-case basis, depending on how they are structured.
But cryptocurrencies are on the FCA’s agenda for this year. The regulator is undertaking a review of the digital coins with the
UK Treasury and
Bank of England. The
Treasury Committee in the UK parliament has also launched an inquiry into digital currencies and the distributed ledger technology that underpins them.
Banks have remained wary of getting involved with cryptocurrencies or businesses dealing with them, in part due to the difficulty of conducting anti-money laundering checks on cryptocurrency transactions. However, Barclays has opened a UK account for
Coinbase – the US-based cryptocurrency wallet and exchange service.