US government officials have ordered multiple cryptocurrency exchanges to fork over comprehensive trading data in order to aid in their investigation of whether or not cryptocurrency markets are being manipulated. Last year, when CME launched the bitcoin futures, it asked the exchanges for data to base the bitcoin price for futures trading.
CME Group Inc's bitcoin futures launch six months ago likely spurred government regulators to take bitcoin more seriously as futures are government regulated and futures trading creates a bridge between the cryptocurrency and traditional finance markets. Several exchanges chose not to comply, claiming CME's request was invasive.
"All participating exchanges are required to share information, including cooperation with inquiries and investigations", said CME spokeswoman Laurie Bischel who stated that their London-based index provider has a disclosure agreement with the four cryptocurrency exchanges. The CFTC and CME are of the opinion that manipulation in private exchanges could cause a skew in the regulated derivative exchanges. But later when CME amended its request to a few hours of trading data, a few exchanges agreed by giving data os some participants. If there was such a clause, then all data pertaining to trading such as date and time of all trades, unfilled or cancelled orders, identities of traders, and size of orders would be available to CME on a then and there basis. It is a known fact that the futures price of an asset is derived from the price of the underlying asset traded in the cash market. The issue of the legal instrument to these exchanges makes it compulsory for them to respond with necessary data.
CME approached a third-party company to calculate the bitcoin futures price, the sources said. The department is said to be looking for ways in which traders can manipulate prices of cryptocurrencies through illegal activities like wash trading. According to the data on CoinMarketCap, Bitcoin is seen trading sub $7000 levels after two months. The CFTC is now said to be working along with the Justice Department to investigate the manipulation in the price of other digital currencies as well. He stated earlier this week that bitcoin market manipulation concerns were overstated, and that anyone attempting to manipulate the market is taking a big risk for minimum benefit.
Neither Bitstamp nor Coinbase commented on the matter.
Kraken CEO Jesse Powell told the Wall Street Journal that the declared oversight of how Bitcoin prices form futures prices has led to spot exchanges questioning the value of their index participation.
The largest cryptocurrency Bitcoin (BTC) was the least affected losing just a little less than 5% in the past 24 hours and was trading at $7,244.
According to crypto news portal, Bitcoin News, since bitcoin is counted as a commodity, it technically falls under the CFTC's jurisdiction.