UK’s Financial Conduct Authority (FCA) investigates 24 firms for manipulation of crypto prices

Manipulating Crypto Prices

Manipulating Crypto Prices? The interest of financial regulators in crypto-related businesses seems to be growing at the same pace as their adoption by an ever-increasing number of users.

According to official reports, The FCA —a British organ with jurisdiction over financial operations— has started an investigation against 24 firms whose businesses involved the use of cryptocurrencies, to determine whether or not their activities are under its jurisdiction and regulatory competence.

Manipulating Crypto Prices?

If companies were found to be operating in circumvention of their obligations, the FCA might proceed in different ways depending on the seriousness of the case:

In the words of a spokesperson working for the FCA, sanctions can range from issuing an initial warning to judicial actions:

“If we conclude that they are, then we may investigate and take action, identifying and determining the most serious matters which pose the greatest risk to consumers.”

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The information was disclosed in response to a Freedom of Information Request in which they also revealed that they were investigating seven whistleblower reports made at various times of the year.

This tactic joins other international efforts that seek greater state intervention in potentially dangerous events such as market manipulation.

A previous investigation conducted by the Department of Justice also addressed similar issues.

The tactics investigated in cryptos are identical to those used in stock markets. However, in the world of cryptocurrencies, there is more impunity as a result of legislation that is not yet fully adapted to the nature of this market.

According to local reports, the strategies that will be investigated include spoofing, which is the flooding of markets with fake orders seeking to trick people into buying or selling their tokens. Wash trading is another strategy used to deceive traders and happens when a person places buy and sell orders against themselves, giving the impression that a given token has a high volume of trades while prices are being manipulated. Once a certain number of purchases or sales are forced, the false orders cease.

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Many other techniques that are considered unscrupulous are used by traders on a daily basis in a market as unregulated and as volatile as that of cryptocurrencies.

Previously, the FCA began a joint work with the U.K. Treasury Committee and the Bank of England (BoE) to explore the risks and potential of digital investments. The issue of cryptocurrency was particularly prominent in the discussions, confirming the growing interest of the British government in knowing more about and correctly regulating crypto-transactions:

“At a high level, there is pressure on the UK authorities to develop a comprehensive strategy towards crypto, as sooner or later the EU will develop its own approach meaning there will need to be compelling reasons for crypto firms to locate in the UK.” Jacob Ghanty told The Independent:

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