Market Overview

With Tether In Focus, The DoJ Is Investigating Last Year's Cryptomania

Share:
With Tether In Focus, The DoJ Is Investigating Last Year's Cryptomania

The cryptocurrency sell-off continued Tuesday after Bloomberg reported the U.S. Department of Justice and the U.S. Commodity Futures Trading Commission are investigating cryptocurrency market price manipulation.

What Happened

The DoJ and the CFTC have been coordinating on a criminal probe of Bitcoin, Tether and crypto exchange Bitfinex and their possible role in driving last year’s cryptocurrency market bubble, according to Bloomberg.

Why It’s Important

Tether’s USDT is one of several so-called “stable coins,” cryptocurrencies that claim they're backed by fiat currencies. Tether claims its currency is backed by the U.S. dollar, but the DoJ is reportedly investigating those claims along with how new Tether coins are created and why they have entered the market primarily via Bitfinex.

Sources familiar with the probe said the DoJ is investigating whether or not traders illegally pumped up the price of bitcoin in late 2017 by using USDT to strategically buy and sell bitcoin based on inside information.

As of this time, no formal charges have been brought against Tether or Bitfinex, but the price manipulation probe along with confusion over last week’s Bitcoin Cash hard fork has stoked investor fears that the cryptocurrency market is volatile, unpredictable and unsafe. The North American Securities Administration Association launched 70 separate fraud investigations into cryptocurrency investment schemes back in May.

What's Next

Bitcoin prices have plummeted 30 percent in the past week to under $4,500, their lowest level since October of last year.

Crypto investors will be watching to see if the DoJ investigation results in criminal charges and how the outcome of the investigation will impact cryptocurrency market sentiment. The Bitcoin Investment Trust (OTC: GBTC) is now down 75.6 percent in 2018.

Related Links:

What Are Stable Coins?

This Week In Cryptocurrency: Bitcoin Cash Fork Chaos, XRP Jumps Ethereum

Photo credit: Coolcaesar, U.S. Department of Justice headquarters

Posted-In: Bitcoin BitfinexCryptocurrency News Legal Top Stories Markets Media Best of Benzinga

 

Related Articles (GBTC)

View Comments and Join the Discussion!
Fastest Market News Application
You'll Hear It First On Pro
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Exxon Mobil Is The Wrong Play For An Oil Rally, Raymond James Says In Downgrade

Tech Shares, Retailer Earnings Roil Markets In Continuing Sell-Off