Crypto Market Surveillance Has Arrived

Tue May 29 13:49:19 UTC 2018
Dr. Sharon Brown-Hruska, Dr. Jordan Milev, and Trevor Wagener

In light of recent news reports that the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) are investigating possible cryptocurrency market manipulation, three NERA experts have published an article titled “Crypto Market Surveillance Has Arrived” in Law360. In their report, Associate Director Dr. Jordan Milev, Consultant Trevor Wagener, and former Managing Director Dr. Sharon Brown-Hruska identify these investigations into possible spoofing and wash trading as the latest in a trend of increased criminal and civil enforcement actions in the cryptocurrency market. These investigations also mark a continuation of joint DOJ and CFTC actions announced a few months ago–the largest-ever coordinated enforcement actions against alleged spoofing in futures markets.

The authors report that increased market surveillance capabilities in crypto markets provide law enforcement and regulators with the tools needed to identify potentially manipulative of disruptive trading behaviors and pursue enforcement actions. Absent market surveillance capabilities, law enforcement and regulators investigating possible wrongdoing in financial markets are at risk of shooting in the dark. While some may worry that investigations could have a dampening effect on the market, the authors argue that the increased regulatory surveillance, and the economic analyses that will follow during anti-manipulation actions, are a positive sign for the future of crypto markets.