Cryptocurrency exchange Bitfinex is going to use special tools to crack down on market manipulation

pulse

March 14, 2018 12:06 PM

Business Insider reported last year on the prevalence of Wolf of Wall Street-style "pump and dump" scams on cryptocurrency exchanges.

Cryptocurrency exchange Bitfinex strikes deal with market surveillance software provider Irisium.
The deal comes after Business Insider highlighted the prevalence of market manipulation and scams in crypto secondary markets.

LONDON — Global cryptocurrency exchange Bitfinex has partnered with a market surveillance company to try and stamp out market manipulation on its platform.

Market surveillance software provider Irisium announced on Wednesday that it is now working with Bitfinex to "identify and investigate manipulative behaviours and suspicious trading practices on its exchange."

Business Insider reported last year on the prevalence of Wolf of Wall Street-style "pump and dump" scams, where traders artificially inflate the price of cryptocurrencies for their own gain.

While cryptocurrency markets are unregulated, US regulators the CFTC, the SEC, and FinRA have all warned investors to be wary of these scams. The SEC cited BI's investigation into "pump and dumps" as part of its paper setting out concerns about potential bitcoin ETFs.

Bitfinex CTO Paolo Ardoino said in a statement on Wednesday: "To meet the complex needs of an evolving digital asset class and to protect our sophisticated participants, Bitfinex requires an agile surveillance system built on the latest technology.

"Together with our experienced team, the Irisium platform will provide the surveillance needed to protect our participants and our venue from trading abuses."

Bitfinex, which is headquartered in Hong Kong, is the world's fourth-biggest cryptocurrency by volume as of Wednesday. The exchange had a 24-hour trading volume of $790 million, according to market data provider CoinMarketCap.com.

Irisium CEO Alastair Goodwin said: "We are at a tipping point in the development of the digital currency marketplace. As professional traders and sophisticated investors enter the market, exchanges need to deploy modern surveillance tools that can detect abusive trading practices and protect their customers."

The US Commodity Futures Trading Commission reportedly issued subpoenas to Bitfinex in December and Tether, the company behind a digital coin that claims to track the US dollar and was cofounded by the same people at Bitfinex.

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