Leading cryptocurrencies, including bitcoin and Ethereum, tumbled after Bloomberg reported that digital currency exchange Bitfinex was subpoenaed by the U.S. Commodity Futures Trading Commission. In addition to the Bitfinex subpoena, South Korea has begun implementing a new set of stricter cryptocurrency regulations, and the U.S. Securities and Exchange Commission stepped in to halt a $600 million initial coin offering on charges of fraud.
According to Bloomberg, Bitfinex was subpoenaed in December along with cryptocurrency Tether, which shares the same CEO as Bitfinex. Tether is one if the 25 largest cryptocurrencies in the world and has a $2.2 billion market capitalization. The company has claimed that its coins are backed by a reserve of U.S. dollars, but skeptics have questioned whether or not those reserves actually exist.
[Read: What’s the Best Bitcoin Wallet for 2018?]
Leading cryptocurrencies such as bitcoin have long prided themselves on being decentralized and free from government regulation, and cryptocurrency investors may now see the tightening regulatory environment as bad news for the digital currency market.
Earlier this month, SEC director Dalia Blass said the SEC will not approve a cryptocurrency ETF for listing on a major U.S. exchange until the funds can provide satisfactory answers to questions related to extreme volatility, lack of liquidity and potential market manipulation.
“Until the questions identified above can be addressed satisfactorily, we do not believe that it is appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products,” Blass wrote on Jan. 18.
The SEC stepped in on Tuesday to halt the $600 million ICO of AriseBank and seize the company’s assets on allegations that the cryptocurrency is a scam.
[Read: Introducing the Blockchain ETF (BLCN): Is It a Good Buy?]
Last week, Bleakley Advisory Group chief investment officer Peter Boockvar said bitcoin investors need to be aware of how far and how fast the cryptocurrency could fall after gaining more than 1,400 percent in 2017.
“When something goes parabolic like this has, it typically ends up to where that parabola began,” Boockvar said on CNBC.
Following the sell-off, bitcoin traded at about $10,200 Wednesday morning. Boockvar said it could potentially finish 2018 as low as $1,000.
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Regulatory Crackdown Sends Cryptocurrency Prices Tumbling originally appeared on usnews.com
