US Commodity Future Trading Commission (CFTC) has sent subpoenas to bitcoin exchanges in its ongoing bitcoin manipulation probe that started at the end of last month. Reportedly, it all started due to the distorted prices in the futures market.
Bitcoin exchanges to hand over trading data to CFTC
The US Regulator, CFTC has subpoenaed four cryptocurrency exchanges viz. Coinbase, Kraken, Bitstamp, and ItBit in the government’s ongoing investigation into trading fraud in the crypto market.
Coinbase is one of the biggest cryptocurrency exchanges which has been moving onto gaining licenses. According to Coinmarketcap, Kraken is at 24th position with a 24-hour trading volume of over 54 million while BitStamp ranks at 38th with 28 million daily trading volume and ItBit is at the 62nd spot with $9.6 million daily trading volume.
These bitcoin exchanges are asked to hand over their complete trading data in order to assist the regulators in their bitcoin manipulation probe. Furthermore, it is also for the prevention of the distorted prices in the CME futures market.
As per Wall Street Journal, sources close to the matter have revealed that this remains a constant problem with CME. Last year, when CME launched the bitcoin futures, it asked the exchanges for data to base the bitcoin price for futures trading.
Above mentioned four crypto exchanges have been those that were requested by CME. However, they refused to comply citing security and privacy as the concerns.
But after CME restricted the trading activities, these exchanges were forced to share data albeit only a limited amount of data has been shared. This, in turn, raised the hackles of the CFTC, a regulatory body that directly regulates CME.
CME’s Bitcoin futures market played a role
It has been believed by the agency that manipulation in exchanges can distort the prices in the government regulated markets. The sources further stated that CFTC considered the Bitcoin futures a risky but worthwhile move.
Apparently, CME didn’t have the agreements that allowed trading data sharing and they had to rely on third-party firms to calculate the index.
The latest manipulation probe was to an extent because of this reason. And in the futures market, this has even more relevance as investors bet on bitcoin price in different time frames. With the bitcoin manipulation probe, the regulators are looking into fake orders and spoofing.
Jesse Powell, the Chief Executive of Kraken recently commented on the market manipulation news:
“If there is any kind of attempted manipulation, whoever is doing it is taking a huge amount of risk for very little possible upside.”
On CFTC’s “newly declared oversight” of prices, he stated that this has the spot exchanges question the cost and value of their index participation.
The company behind ItBit exchange, Paxos’ Chief Executive Charles Cascarilla stated,
“We have definitely entered an unknown area where it is clear there is a desire for tightened oversight.”
What do you think of the subpoenas send by CFTC to these exchanges for trading data? Share your thoughts with us!