Billionaire investor and former hedge fund manager Mike Novogratz said that he is optimistic that the US Department of Justice’s (DOJ) recently-launched probe into allegations of bitcoin price manipulation will contribute to the long-term health of the cryptocurrency market.
Speaking in an interview with Bloomberg, Novogratz — the founder of $250 million cryptocurrency merchant bank Galaxy Digital — said that this increased oversight will help weed out bad actors from the nascent ecosystem.
“Weeding out the bad actors is a good thing, not a bad thing for the health of the market,” Novogratz said. “Plenty of exchanges have these inflated volume numbers to create some sense of excitement around coins.”
As reporter, the DOJ is scrutinizing whether cryptocurrency traders and other market actors have engaged in illegal activities to manipulate the bitcoin price, as well as the value of other prominent cryptocurrencies.
Novogratz’s optimistic comments on the probe are not unique among Wall Street’s cryptocurrency bulls.
Cameron Winklevoss, who co-founded cryptocurrency exchange Gemini, told the publication that the company welcomes “any inquiry that serves to foster rules-based marketplaces and deter bad actors.” Gemini, incidentally, recently struck a deal with Nasdaq to use the stock exchange operator’s surveillance technology to flag unusual trading patterns in real time.
Similarly, Tom Lee — founder of Fundstrat Global Advisors — said that the investigation was “really welcome news” because it will bring “adult supervision” to the cryptocurrency markets. Fundstrat has predicted that the bitcoin price will reach $25,000 before the end of the year, an outlook it has not wavered from despite the recent downturn.
The bitcoin price traded sideways in the 24 hours before this article was written, despite significant intraday volatility that caused the flagship cryptocurrency to plunge from $7,738 to $7,331 in a span of just four hours. Bitcoin has since stabilized at a present value of $7,554 on Bitfinex.