CFTC Subpoenas BTC Exchanges over ‘Fixing’ Spot Prices

CFTC Subpoenas BTC Exchanges over ‘Fixing’ Spot Prices

US commodities regulatory body CFTC would join the US Justice Department in criminal investigations against pot Bitcoin markets over allegations of price manipulation by the Chicago Mercantile Exchange (CME).
According to a WSJ news report, the US Commodity Futures Trading Commission (CFTC) will collaborate with the Justice Department which launched a probe in May to probe spot BTC markets for refusing to share trading data with the CME.
According to CME spokesperson, “all participating exchanges are required to share information, including cooperation with inquiries and investigations.”
The news report quoted resources claiming, “CFTC has opened an investigation into whether traders have colluded to manipulate bitcoin prices.”  The commodities regulatory body will work closely with the Justice Department in all matter of investigating these allegations, people familiar with the matter have confirmed.

CME alleges spot BTC market fixes

The investigations by the government regulators began on the back of allegations of non-compliance by CME, Chicago. The apparent trigger for this was the refusal by ItBit, Coinbase, Kraken, and Bitstamp to provide January’s trading data with the Mercantile Exchange.
Upon the CME asking for particular data, many of the exchanges denied forwarding such information and were “non-compliant” with regulatory needs. Many of them later provided “some” data, when CME asked for only a few hours of trading data and not for the whole day. However, the little information that some of the exchanges did share was not conclusive and was apparently, “restricted to a few market participants.”
The allegations by CME and the lack of proper action by the mentioned exchanges forced the CFTC, which is in charge of bitcoin futures markets into subpoenaing  these exchanges. The issue of the legal instrument to these exchanges makes it compulsory for them to respond with necessary data.
CFTC has gone on record stating that, the disciplinary action was on the significant denial of access over bitcoin trading data, and the creation of an atmosphere of ‘fight’ among the stakeholders.  The body will thus launch a full-fledged investigation into manipulation of spot prices of bitcoins in these exchanges.
Over discussions on the legitimacy of CFTC as a regulatory body for Bitcoin, the default categorization of the cryptocurrency as a ‘commodity’ by the government, is sufficient to legitimize CFTC’s regulatory stipulations.

Exchanges criticize strong action by CFTC

Responding to the subpoena by CFTC, Kraken CEO,  Jesse Powell says, CFTC action

“has the spot exchanges questioning the value and cost of their index participation.” Criticizing the strong action, Paxos (which own ItBit) CEO, Charles Casarcilla says, “We have definitely entered an unknown area where it is clear there is a desire for tightened oversight.”  Other named exchanges, Coinbase and Bitstamp, did not react to the CFTC “oversight.”

In the meanwhile, BTC prices dropped as trading began on Monday, over news of cyber intrusions’ in South Korean crypto markets.

South Korean intrusion pushes BTC price Drop

Over the weekend, news of a cyber breach in a South Korean crypto exchange, set bitcoin prices back by nearly 10-percent with prices. Since a  high of $20,000 in December, bitcoin value has dropped steadily hitting an annual low of $6,000 in February.

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