The Danger Of Spoofing In The Cryptocurrency World

If there is one word that Leonardo González Dellán could fittingly describe digital currencies, it would be that it is volatile. The price is fluctuating in a significant manner and quite often especially during the early days when a cryptocurrency has just been introduced into the market. This is still happening even to the most popular and biggest digital currency which is bitcoin. One god example is during the end of last year when the every coin has reached almost $20,000 but in just a matter of few weeks it has already spiraled down to one third of the original value.

The time scale by which the prices can fluctuate can be as long as months or as fast as seconds. This is the reason why criminal operations can be accomplished because of the flash crashes that the largest digital currencies are experiencing. This occurs when the hottest tokens are bought at a price lower than usual due to fluctuations and then sold again when the price is back to normal. Sadly, the criminals’ scheme does not end there. A new trend has been caught and it is called spoofing.

Spoofing happens when the criminals try to alter the price of the cryptocurrency in an artificial method through accomplishing fake orders. Traders influence the change in the market by doing fraudulent transactions which could manipulate the investors. As a result, they eight feel positive or negative by the actions thus they buy or sell a digital currency therefore impacting the cryptocurrency’s price at the same time. After the traders have achieved the price they want, they will withdraw the fraudulent transactions they have made.

There are already sources saying that the Department of Justice of the United States is currently doing investigations in order to see if the bitcoin network has been a victim of spoofing through price manipulation. Leonardo González Dellán, on the other hand, believes that the investigation will only focus on bitcoin for now because it is the biggest cryptocurrency in the market. Another reason why they are focusing on bitcoin is the significant price increase in 2017 that resulted to more investors flocking into the network.



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