Officials in the US have opened a criminal investigation into whether traders are manipulating the price of Bitcoin and other digital currencies.
The Justice Department is said to be looking into techniques used to bump up prices including spoofing, in which traders flood the market with fake orders that are never fulfilled, and wash trading, which gives a false impression of market demand when a buyer purchases against themselves, tempting others to follow suit.
Prosecutors are working with the Commodity Futures Trading Commission, a financial regulator that oversees trading against cryptocurrencies, according to Bloomberg.
The crackdown comes amid growing concerns that hugely popular virtual currencies are particularly susceptible to fraud and that exchanges, the websites where people can buy and sell currency, are encouraging cheating.
Meanwhile, alarming swings in value, a lack of regulation and a growing trend in dubious celebrity-backed "initial coin offerings" have raised alarm bells across the world, forcing China to ban cryptocurrency trading, and Japan and the Philippines to bring in regulators.
Bitcoin enjoyed a sharp rise, surging to almost US$20,000 ($29,000) towards the end of 2017 after starting the year below US$1,000.
But potential regulation in the US and the UK has dampened traders' spirits, with a slump in value to US$7,500 yesterday.
The European Union's top banking, securities and pensions watchdogs have all warned cryptocurrency investors could lose all their money in what they described as a Bitcoin "pricing bubble".
Evangelists have hailed cryptocurrency as an alternative to central banking, in an attempt to smarten up its reputation as a vehicle for money laundering and tax evasion, and a collection of exchanges that operate in the UK has created self-regulated CryptoUK, whose members include Coinbase, eToro and CryptoCompare.
The trade body, formed in February, said it had produced the first code of conduct for the industry to abide by.
Other exchanges that have taken matters into their own hands include Gemini, owned by the Winklevoss twins, who famously became Bitcoin billionaires after investing their Facebook payout cash when Bitcoin first emerged more than 10 years ago
.In April, Gemini called in Nasdaq to conduct surveillance on the coins sold on its own exchange site to weed out manipulation.
Economists have raised alarm bells that cryptocurrency poses a serious threat to a government's ability to manipulate its own currency because it allows money to move easily across borders without official control.
In March, Bank of England Governor Mark Carney outlined the need for some form of regulatory clampdown.
Speaking during the Scottish Economics Conference, he said:
"In my view, holding crypto-asset exchanges to the same rigorous standards as those that trade securities would address a major underlap in the regulatory approach."
Technology giants Google and Facebook said they will ban adverts promoting Bitcoin or initial coin offerings.