Bitcoin Price: Crypto Crash Blamed on U.S. Probe, South Korea Exchange Hack

The crypto markets took a hit on Sunday as the price of bitcoin dropped to its lowest value in two months—from around $7,280 to under $6,700, according to Coindesk statistics.

EOS, Ethereum, Bitcoin Cash, Ripple and Litecoin all suffered minor losses of between 5 and 10 percent this weekend based on metrics from CryptoCompare, another website that tracks the pricing of the major digital coins. Charles Hayter, the founder of the platform, told Newsweek that two reasons for the recent stumble included a recent crypto-exchange hack in South Korea and an article published Friday by the Wall Street Journal which detailed an ongoing market manipulation probe in the U.S.

Crypto-exchanges, Hayter said, are currently "caught between a rock and a hard place" thanks to jurisdictional issues and legal disputes, but he characterized Sunday's price drop as "relatively minor." At the time of writing, the price of a single bitcoin had stabilized at approximately $6,680 ($5,033). It was a long way from the lofty highs of December last year, when a single "coin" was valued at $20,000.

A picture taken on February 6 shows a visual representation of the digital crypto-currency Bitcoin, at the "Bitcoin Change" shop in the Israeli city of Tel Aviv. Bitcoin fell to its lowest price in two months on Sunday. JACK GUEZ/AFP/Getty Images

According to the Wall Street Journal, the U.S. Commodity Futures Trading Commission (CFTC) has sent subpoenas to four crypto-exchanges—Bitstamp, Kraken, ItBit, and Coinbase—demanding answers on the subject of market price distortion. Bloomberg has reported a criminal probe is being spearheaded by the Justice Department. The U.S. Securities and Exchange Commission (SEC) warned last year that investors should be aware of growing "fraud and manipulation" in crypto markets.

"I caution…against promoting or touting the offer and sale of coins without first determining whether the securities laws apply to those actions," wrote chairman Jay Clayton at the time. "Selling securities generally requires a license, and experience shows that excessive touting in thinly traded and volatile markets can be an indicator of 'scalping,' 'pump and dump' and other manipulations and frauds."

Crypto-exchanges are used to buy and sell digital currencies. Their unregulated nature has resulted in a backlash from some governments, including in the U.S., U.K., China and South Korea. In recent months, major hacks and cyberattacks have resulted in the loss of funds worth millions of dollars. In one of the most extreme examples, South Korea's Coincheck lost the equivalent of $500 million.

This photo illustration shows a Vietnamese cryptocurrency investor looking at the latest Bitcoin values on a smartphone in Hanoi on April 12. NHAC NGUYEN/AFP/Getty Images

This weekend it emerged that another exchange, known as Coinrail, had been targeted. According to Coindesk, a cryptocurrency focused news website, around $40 million worth of coins were stolen. The platform, it said in a statement (translated via Google Translate), lost up to 30 percent of its funds.

"The exact damage of the leaked coin/token is currently being confirmed," the team said. The news coincided with bitcoin's price drop, but it is difficult to confirm if the two cases are actually entwined.

Indeed, not everyone appeared to be convinced.

"Coinrail trades over 50 cryptocurrencies but is a relatively small exchange as in the last 24-hour period it registered a $2.6 million trading volume," wrote CryptoGlobe, a news fork of CryptoCompare. "As some pointed out, the drop was likely a delayed reaction to a WSJ [Wall Street Journal] report."