Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Nearly $40 billion has been wiped off the crypto markets in a single day after reports of CFTC regulators investigation price manipulations, emerged.
On Sunday, June 10, the price of Bitcoin took a nose-dive as the cryptocurrency corrected by more than 10 percent breaking its crucial resistance of $7000 levels. According to the data on CoinMarketCap, Bitcoin is seen trading sub $7000 levels after two months. On Sunday, Bitcoin hit a two-month low of $6709.
However, yesterday’s price crash was not just limited to Bitcoin as nearly all of the top 100 digital currencies were seen correcting by 5-7% on average. Along with Bitcoin other major digital currencies like Ethereum, Ripple, Bitcoin Cash and others were seen correcting by a significant amount. In fact, it seems that Bitcoin has managed to hold-off the losses relatively well in percentage terms in comparison to other altcoins. More than $40 billion has been wiped off from the crypto market in a single as the overall crypto market valuation has slipped below $300 billion.
On Friday, June 8, Wall Street Journal reported that the U.S Commodities Futures Trading Commission (CFTC) has launched a probe to see the possibility of potential price manipulation in four major digital currency exchanges: Bitstamp, Coinbase, itBit and Kraken.
The unnamed sources mentioned by the WSJ told the publication that the regulators had already opened the investigation after CME Group started trading Bitcoin futures last year in December. When the first futures contracts settled in January this year, CME had asked all of these four exchanges to share trading data, however, many of the crypto exchanges didn’t comply saying that CME’s request was invasive. But later when CME amended its request to a few hours of trading data, a few exchanges agreed by giving data os some participants.
According to sources, CME had approached a third-party London-based company to calculate the Bitcoin futures prices. All the four exchanges refused to provide data to this London-based company which is supposedly having its on cryptocurrency exchange.
This quarrel between the CME and the crypto exchanges provided an impetus to the CFTC to launch an investigation in this matter. The regulators from CFTC were upset that CME did not have an obligatory agreement with the exchanges that would require the exchanges to share price data that is related to the futures contracts. The CFTC is now said to be working along with the Justice Department to investigate the manipulation in the price of other digital currencies as well.
Later clarifying to this matter, CME spokesperson Laurie Bischel said that the London-based index provider has a disclosure agreement with all four exchanges:
“All participating exchanges are required to share information, including cooperation with inquiries and investigations.”
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, also said there is a clear need for stricter oversight.
Another report of South Korea’s Coinrail exchange getting hacked added further to the market woes on Sunday. According to the Google Translate of the Coinrail announcement, “Two-thirds of the coins confirmed to have been leaked are covered by freezing / recalling through consultation with each coach and related exchanges”.