Cryptocurrency Exchange Trading Data Being Examined by CFTC Regulators


Regulators Call For Trading Data From BTC Exchanges

US Commodity Futures Trading Commission (CFTC) regulators have demanded that several bitcoin exchanges hand over comprehensive trading data to assist a probe into whether manipulation is distorting prices in markets linked to the cryptocurrency.

The inquiry succeeded the release of Bitcoin (BTC) futures by CME Group in December last year. CME forms its Bitcoin (BTC) futures prices based on data from four crypto exchanges; Bitstamp, Coinbase, itBit, and Kraken, where manipulative trading could reportedly have distorted the value of BTC futures. Investigators are going after trading schemes that can be used to manipulate the price of BTC futures that the government directly regulates.

CME asked the four exchanges to share documents of trading data after its first contract settled in January, people familiar with the matter said. But several of the exchanges declined to comply, arguing the request was intrusive, the people said. The exchanges ultimately provided some data, but only after CME limited its request to a few hours of activity, instead of a full day, and restricted to a few market participants. The crypto exchanges only handed over their data once CME shortened the time window of its request from one day to a few hours, said the sources.

This annoyed CME’s regulator, the Commodity Futures Trading Commission, these people said. In response, the commission subpoenaed the exchanges for the data. CFTC officials backed the launch of bitcoin futures, saying they viewed it as a risky but worthwhile project.

Government investigators are looking for trading schemes that can be used to manipulate the price at which a cryptocurrency trades, the people said. In one example, a trader enters large orders with the intention of tricking others into thinking there had been a fundamental change in the supply and demand of bitcoin. That might induce others to raise their prices to buy, which can allow the spoofer to sell at an artificially high price.

Earlier this year, the CFTC issued a warning spelling out expectations for approval of new cryptocurrency derivatives. The CFTC said “a heightened level of monitoring” of the bitcoin market is “warranted” for exchanges that want to launch new futures products.

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