Exchanges for Trading Data Led by CFTC Writs

A report last month stated that the US Justice Department had launched a criminal probe into whether the bitcoin and cryptocurrency markets the subject of manipulation and misconduct, citing “four people familiar with the matter.”

The Wall Street Journal has published a report in which it once more cited “people familiar with the matter,” the CFTC has “open[ed] an investigation into whether traders have colluded to manipulate bitcoin prices.

It was added in the report that “the CFTC is coordinating with the US Justice Department” in its investigations. According to the Wall Street Journal, the CFTC’s investigation was propelled by a lack of responsiveness to ask from CME that Bitstamp, Coinbase, Ibit, and Kraken should provide trading data back in January. To that effect, it was reported that several exchanges initially “declined to comply,” before “provid[ing] some data” after CME reduced the request to just several hours of trading activity, rather than a full day. The report added that the data provided only had information “restricted to” a few market participants.”

The CFTC, being the regulatory authority that has been tasked with to oversee CME’s bitcoin future markets, has reportedly summoned the exchanges for the data in response to the dispute. The report has described the “fight over access to bitcoin trading data” as having comprised a significant factor in the CFTC’s decision to launch an investigation into price manipulation in the BTC markets.

Bitcoin’s designation as a commodity has legitimized the investigation. It has juridically granted the CFTC jurisdiction over the commodity markets, underscoring derivative markets overseen by the regulator. Laurie Bischel, CME spokeswoman, said: “All participating exchanges are required to share information, including cooperation with inquiries and investigations.”

The chief executive officer of Kraken, Jesse Powell, has criticised the writ, saying: the “newly declared oversight” of the CFTC “has the spot exchanges questioning the value and cost of their index participation.” Charles Cascarilla, who is the chief executive officer of Paxos, the company that operates Itbit, said: “We have definitely entered an unknown area where it is clear there is a desire for tightened oversight.” Bitstamp and Coinbase were yet to address the writ at the time of writing.


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