The US Commodity Future Trading Commission (CFTC) has subpoenaed Coinbase, Kraken, Bitstamp, and ItBit in an ongoing Bitcoin manipulation probe started last month, reports Coingape.
It is thought that the investigation has been initiated due to the distorted prices in the futures market.
Coinbase is one of the world’s major cryptocurrency exchanges with Kraken in 24th position and a 24-hour trading volume of over 54 million. Bitstamp ranks 38th with 28 million daily trading volume, and ItBit is 62nd with a $9.6 million daily trading volume.
The investigation followed the launch of bitcoin futures on CME Group Inc.’s CME, -0.45% exchange six months ago. CME’s bitcoin futures derive their final value from prices at these exchanges. Any kind of manipulative trading in those markets is reported to be able to influence the price of bitcoin futures that the government directly regulates.
The exchanges have been requested to submit their trading data to the CFTC in an attempt to prevent distorted prices in the CME futures market. The Wall Street Journal has said that the problem with CME has existed since it launched Bitcoin futures, requesting data from the exchanges in order to base the bitcoin price for futures trading. CFTC officials had previously backed the launch of bitcoin futures, viewing the move as risky, but worthwhile.
Apparently, CME didn’t have the agreements that allowed trading data sharing, and they had to rely on third-party firms to calculate the index, according to Market Watch. On the regulators search into fake orders and spoofing, Jesse Powell, the Chief Executive of Kraken recently commented:
“If there is any kind of attempted manipulation, whoever is doing it is taking a huge amount of risk for very little possible upside.”
The company behind ItBit exchange, Paxos’ Chief Executive Charles Cascarilla stated that “We have definitely entered an unknown area where it is clear there is a desire for tightened oversight.”
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