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US Launches Criminal Probe Into Bitcoin Price Manipulation (bloomberg.com)
The Justice Department has opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies, dramatically ratcheting up U.S. scrutiny of red-hot markets that critics say are rife with misconduct, Bloomberg reported Thursday, citing people familiar with the matter. From the report: The investigation is focused on illegal practices that can influence prices -- such as spoofing, or flooding the market with fake orders to trick other traders into buying or selling, said the people, who asked not to be identified because the review is private. Federal prosecutors are working with the Commodity Futures Trading Commission, a financial regulator that oversees derivatives tied to Bitcoin, the people said. Authorities worry that virtual currencies are susceptible to fraud for multiple reasons: skepticism that all exchanges are actively pursuing cheaters, wild price swings that could make it easy to push valuations around and a lack of regulations like the ones that govern stocks and other assets.
The investigation is focused on illegal practices that can influence prices -- such as spoofing, or flooding the market with fake orders to trick other traders into buying or selling...
So, just like the stock market.
Straight outta the pennystock playbooks before the SEC finally brought the hammer out.
Does this mean the US government is officially recognizing Bitcoin as a currency? A stock?
Or would is anything where there is "flooding the market with fake orders to trick other traders into buying/selling" a crime?
If someone did this with kids trading cards, or something like Pokeman, or Magic the Gathering cards- would that also incite an investigation with the government? Or- is it significant that they are investigating this as it means they now "Recognise" bitcoin?
If someone sought to use them as the basis of a form of currency, using the mere fact that they are limited in number to "collateralize" accounts worth hundreds of billions of dollars, and were used to as a tool to transfer large sums of money internationally, and also led to numerous fraud schemes stealing billions in aggregate - then you bet they would. It is simply recognizing what is actually being done.
Unregulated market trading has always attracted inventive new schemes to make money out of nothing. The difference is only that the Pokemon card scheme would never have gotten off the ground, it would not be esoteric enough to enlist devotees, and failed to have the novelty of the "mining" component wherein people could hope to profitably implement a limited production of said artifact themselves.
The only recognition here is that bitcoin is being used as an unregulated financial vehicle subject to fraud, abuse, and to facilitate crimes. The idea about bitcoin enthusiasts that "the Fed can't do anything about bitcoin, unless they recognized it as a valid currency" is pure self-delusion.
Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
If it led to people actually dying in real life you bet they would.
Cryptocurrency frauds and thefts have actually taken billions of dollars from people's pockets.
A valid comparison to Grand Theft Auto would be the schemes for accumulating and manipulating currencies that only exist in videogames and are not convertible at all the real money.
A good comparison is the Linden Dollar in Second Life. No one regulates the Linden Dollar - but the Linden Dollar does not leave the game, and is not convertible to hard currency. There is a limited Linden Exchange in which players can buy and sell Linden Dollars from each other, exactly like trading cards.
But you will notice that "loot boxes" purchased with real world money are now being treated as regular gambling in many places.
Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
If the market for Pokeman (whatever that is) involved illegal market manipulation then yes, it would be investigated. Don't mistake something being so obscure or small scale that it isn't worth going after with that not being illegal. If I scam someone on $1 then I have committed a crime but it isn't likely the scammed person/group would bother to report it , and it isn't likely to be prioritized over other investigations if it is reported.
This was the inevitable outcome of permitting electronic currency trading on the investment market. These guys are idiots for even allowing this trading to happen!
The users of any electronic currency want a currency to be stable so that it gets wide adoption and every one can be comfortable with using and saving it for retirement, etc.
The market investors want the currency to be unstable. If the currency was stable nobody could fleece any money out of all the other traders, so the investment market desires the currency to be unstable.
The problem is the currency only has a subjective value based upon what other people think it is worth, and that value is always going to be undermined by the investment market where big chunks of currency can be gamed to force market swings, which is exactly what the users do not want!!!