CFTC Widens Cryptocurrency Manipulation Probe, Demands Trading Data from Exchanges

U.S. regulators have demanded that several cryptocurrency exchanges hand over trading data tied to an ongoing investigation into price manipulation, The Wall Street Journal has learned. The request, which was initiated by the Commodity Futures Trading Commission (CFTC), is part of a six-month probe into whether bitcoin futures contracts are distorting market prices.

Investigation Widens

The price-manipulation probe was launched by CFTC regulators back in December shortly after CBOE and CME introduced the first-ever bitcoin futures contracts. According to WSJ sources, CME asked four exchanges to share trading data following the settlement of its January futures contract. The four exchanges were Bitstamp, Coinbase, itBit and Kraken.

Although the exchanges provided some data, they ultimately refused to grant comprehensive information to CME, which is supposed to monitor trading activity to ensure that individual trades do not skew futures prices. The data that was handed over to CME was limited to a few hours of activity instead of the initial request for a full day.

Frustrated by the dispute, the CFTC subpoenaed the exchanges for the data. It is not entirely clear where the situation stands. However, a spokesperson for CME told WSJ that “all participating exchanges are required to share information, including cooperation with inquiries and investigations.”

Regulatory Spotlight

Cryptocurrency exchange Bitfinex is also facing scrutiny from the CFTC over alleged ties to Tether, the dollar-backed stablecoin that has been unable to prove the extent of its dollar-denominated assets.  Both companies share the same executives, which has prompted an investigation into price manipulation. (Basically, Tether has vastly increased the supply of USDT tokens without providing adequate proof that it holds the same amount of U.S. dollars. Some analysts have claimed that Bitfinex has facilitated this growth, and is largely responsible for bitcoin’s massive price growth since early 2017.)

The CFTC, which considers bitcoin to be a commodity, isn’t the only regulator flexing its investigative powers. The U.S. Securities and Exchange Commission (SEC) has subpoenaed over 80 cryptocurrency firms as part of an ongoing probe into digital assets.

The SEC recently appointed a crypto czar to oversee digital currencies and initial coin offerings (ICOs), a sign that the agency was planning to issue more comprehensive rulings on the subject. Chairman Jay Clayton has strongly implied that all ICOs are securities, which would put them under the purview of the SEC.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.


Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi