Crypto-currency: Its dangers and the regulations associated with them

Crypto-currency: Its dangers and the regulations associated with them
20 January 2022     3455

Crypto-currency: Its dangers and the regulations associated with them

The U.S. Department of Law has launched a criminal investigation into potential manipulation of the Bitcoin price. Given that these markets are not regulated they pose a threat to unethical behaviors. There are specifically wealthy traders who start investing in a project to create a bubble; As soon as people start making a serious investment in their project they soon leave the project and disappear.

For example, a project called "Squid Game" was recently launched, which dropped from $ 2,856 to $ 0.0008 in 5 minutes! This practice already has its name: "Rug-pull." The biggest stumbling block for this project was the fact that investors could not withdraw money at any time. Given the script of the series, such an ending is quite ironic.

Such trends are also seen at the macro level in the history of Bitcoin. For example, in the last few months Bitcoin has first risen from $ 1,000 to $ 16,000 and then dropped back to $ 7,000. Which most likely indicates that we are dealing with speculators who are interested in quick profits, while the long-term project is tenfold. In other words, they create a bubble to make money at its peak and then sink the project.


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Investigation

Investigations into traditionally illegal practices that change prices - such as spoofing, or filling the market with fake orders to get people to see them as signals; Accordingly start buying or selling. Federal prosecutors work with the Commodity Futures Trading Commission, which oversees Bitcoin.

The administration is concerned that cryptocurrency itself poses a greater risk than other types of exchange systems due to a lack of regulation; Added to this is the frequent fluctuations in price, which can be artificially caused by the falsification of various signals.

Bitcoins reaction to this information was naturally negative, causing it to fall by 3%; There is generally a 20% drop after the May 4 peak.


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Similar problems and threats have led China to decide to ban cryptocurrency exchanges; Japan and the Philippines are instead trying to regulate them, causing a drop of $ 8,000.

Nevertheless, Bitcoin still has its fans, loyalists attending press conferences, and star-studded responses. Which is gaining more and more interest from Wall Street.


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In addition to spoofing, the law department also oversees wash trading. Unlike the former, the latter creates the illusion that the market is popular with self-trading. Prosecutors are also examining Bitcoin & Ether in this regard.

The investigation is in its early stages and represents an attempt by the US government to control the processes initiated by banks and traders who neglect the state. But if the prosecutors manage to notice any problematic details, they will be able to impose sanctions on this or that market, company, person, etc.


Target fraud

It is becoming increasingly clear that such threats potentially limit the growth of the industry as many investors become more wary of it. At the same time, however, the regulations allow investors who are heavily dependent on their own investments to be more or less insured in this regard.

Therefore Bitcoin can become a much more secure and solid project (especially for those who are not already wealthy) and enable investors to invest more confidently in various projects.

Ika Nizharadze

Ika Nizharadze

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