CFTC Asks for Trading Data From Cryptocurrency Exchanges On Suspicion of Price Manipulation

According to the latest report from Wall Street Journal, the US Commodities Futures Trading Commission (CFTC) has subpoenaed for digital currency exchanges in the country while asking them to produce the trading data and check the possibility of any Bitcoin price manipulation.

Sources familiar with this matter say that the CFTC regulators started the investigations after the launch of Bitcoin Futures Contract by CME Group Inc. last year in December 2017. CME Group obtains the price of Bitcoin futures based on the data provided by four cryptocurrency exchanges: Bitstamp, Coinbase, itBit and Kraken. Sources say that CFTC doubts whether these exchanges are involved in manipulative trading practices which can affect the price of Bitcoin futures.

The CME Group asked these four cryptocurrency exchanges to share trading data soon after the first futures contracts were settled in January 2018. However, calling this request as intrusive, the cryptocurrency exchanges refused to cooperate with CME. Later, when CME shortened the time window of its request from few days to some hours, the exchanges agreed to provide data from some participants.

As per the report from WSJ, CME sought this information from a third-party London-based company which calculates the Bitcoin price to be used for futures contracts. However, all the exchanges refused to provide data to this London-based company claiming that the company has its own trading platform.

With this ongoing dispute, the CFTC considered it right to intervene and thereby open an investigation further into this matter. The CFTC was slightly offended by the fact that the CME Group did not had data sharing agreements with the four exchanges before the launch of the Bitcoin futures contracts last year in December 2017.

The CFTC is said to be coordinating this investigation with another crypto-market manipulation probe which is currently been pursued in tandem with the U.S Justice Department. In addition to Bitcoin, that investigation is also focused on other altcoins.

Downplaying the significance of market manipulation on crypto exchanges, Kraken CEO Jesse Powell was quoted saying “If there is any kind of attempted manipulation, whoever is doing it is taking a huge amount of risk for very little possible upside.”

Powell further added that the CFTC’s, “newly declared oversight…has the spot exchanges questioning the value and cost of their index participation.”

Yesterday, on Sunday, June 10 cryptocurrency market saw a huge downfall as the price of Bitcoin and other altcoins corrected by more than 5-7% in a single day taking Bitcoin to sub $7000 levels. The overall valuation of the cryptocurrency market dropped below $300 billion.