Published: Wed, June 13, 2018
Business | By Kate Woods

US Regulator Subpoenas Coinbase, Kraken, Bitstamp & ItBit in Bitcoin Manipulation Probe

US Regulator Subpoenas Coinbase, Kraken, Bitstamp & ItBit in Bitcoin Manipulation Probe

The subpoenas were part of the ongoing investigation of price manipulation in cryptocurrency exchanges.

Regulators opened the investigation after CME Group Inc. introduced bitcoin futures in December, according to the sources.

CME spokeswoman, Laurie Bischel, stated: "All participating exchanges are required to share information, including cooperation with inquiries and investigations".

This quarrel between the CME and the crypto exchanges provided an impetus to the CFTC to launch an investigation in this matter. The exchanges refused, saying that the request was "invasive", and CME changed the request to cover only a few hours' worth of data.

Without a great deal of information presented by the exchanges, the CFTC took matters into its own hands, sending them a subpoena for the information. 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.

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According to Wall Street Journal CME had asked for the information through a third party which calculates the Bitcoin price for use in the futures. The department is said to be looking for ways in which traders can manipulate prices of cryptocurrencies through illegal activities like wash trading.

CME and the CFTC are expected to monitor trading for that hour to determine whether individual trades distort the futures price.

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".

CME offers traders a variety of bitcoin futures for months into the future.

Bitstamp and Coinbase haven't responded to requests for comments on the investigation. "If there is any kind of attempted manipulation, whoever is doing it is taking a huge amount of risk for very little possible upside".

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Jesse Powell chief executive of the Kraken exchange told the WSJ that the "newly declared oversight" of how BTC prices form futures prices "has the spot exchanges questioning the value and cost of their index participation".

Charles Cascarilla, chief executive of the company operating itBit, said there is clear desire for stricter 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 May, the CFTC announced there is a need for a higher level of monitoring the bitcoin market for exchanges that offer futures.

Four major bitcoin exchanges have been ordered to turn over comprehensive trading information to US government investigators, following fears of bitcoin futures-driven market manipulation.

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