The U.S. Department of Justice is working with the U.S. Commodity Features Trading Commission to investigate whether cryptocurrency traders are manipulating the prices via illegal practices or not. The private investigation is now underway according to four unnamed people close to the federal probe.

Federal prosecutors are identifying if traders are spoofing, the act of flooding the market thru fake orders to improve the demand, increase prices, and cancel orders. There are also other tactics that traders take advantage. The authority noticed wash trading where a cheater trades with himself to inflate the demand, resulting in the rise of prices.

The lure of cryptocurrency is not tied to government or any bank. Digital coins are not regulated by the Securities and Exchange Commission (SEC) in America, so traders are on their own and unprotected against a Wild West-like market. But there is no evidence to prove that cryptocurrency exchanges pursue cheaters. Plus, there are no means of recovering lost monies from fake cryptocurrency startups.

A great example of the cryptocurrency woes is the ICO, which stands for the Initial Coin Offering. Companies that plan to launch a new platform will provide tokens in exchange for investments. This is a bit similar to Kickstarter, in which projects enlist those who receive a product. For this reason, startups disappear with cash and not launch their coin platforms.

Last month, ICO-related scams reached to the point where the SEC opened investigations to crack down on advisory firms, companies, and lawyers. The agency believes these digital currencies should be listed as securities, which are a tradable financial asset that gains over a long span of time. These are registered with reliable regulators and are considered securities laws to protect investors against potential issues like fraud.

Despite the interest in cryptocurrencies like Bitcoin, the market is still volatile. For example, a Bitcoin was worth $6, 897 last year, increased to $17,549 over a month later, and decreased up to $7,964 in February this year. Since then, Bitcoin value has experienced rises and drops.

The Bitcoin slump stems from Japan and other nations. The Philippines now regulate the digital currency. China bans cryptocurrency exchanges. Google and Microsoft also ban crypto-related ads due to its unregulated nature and scams.

Meanwhile, the Commodity Futures Trading Commission in America does not regulate the trading of digital coins. The agency deals with futures, which are an agreement to buy and sell an item. It also deals with contracts to provide buyers the ability to purchase and sell an asset for a reasonable price on a specific date.