On June 8, it was reported[1] that the U.S. Commodity Futures Trading Commission (CFTC) demanded extensive trading data from several cryptocurrency exchanges in order to investigate whether there has been price manipulation in the crypto market.
Earlier, on May 24, Bloomberg reported that a criminal probe into Bitcoin[2] (BTC) and Ethereum (ETH) price manipulation by crypto traders had been opened by the U.S. Department of Justice (DOJ) in conjunction with the Commodity Futures Trading Commission (CFTC). That information was indirectly confirmed in the recent Wall Street Journal report, although it was made clear that the DOJ was studying potential price manipulation in a separate case. In May, some mainstream players, including former Wall Street executive and billionaire investor Michael Novogratz, and Cameron of Winklevoss twins, president of the Gemini exchange, greeted the probe[3].
What provoked the CFTC investigation?
According to the Wall Street Journal, the probe followed the launch of BTC futures by CME Group, a major derivatives marketplace, in December 2017. CME generates its BTC futures prices based on data from four major crypto exchanges: Bitstamp, Coinbase, itBit and Kraken, where manipulative trading could potentially have altered the value of BTC futures.
After the settlement of the first contract in January, CME asked the four exchanges to provide trading data. However, several of the exchanges refused to cooperate, saying that the request was intrusive. The crypto exchanges only handed over their data once CME shortened the time window of its request from one day to a few hours, according to the Wall Street Journal’s sources. It was also reported that CME originally sought the information through a third-party — a London-based company that calculates the Bitcoin price to use for its futures contracts. The sources added that the
