Traders in the United States are bypassing federal laws banning them from accessing offshore exchanges to trade high-risk cryptocurrency derivatives, according to research from Inca Digital.
What Happened: U.S. traders are placing leveraged bets on whether virtual assets like Dogecoin (CRYPTO: DOGE) and Bitcoin (CRYPTO: BTC) will rise or fall on foreign exchanges like FTX and Binance, as per research from Inca Digital, the Wall Street Journal reported Friday.
Inca primarily searched through Twitter Inc.’s (NASDAQ:TWTR) social media platform to come to its conclusion. Out of the 2,000 Twitter accounts that belonged to cryptocurrency derivatives traders, 372 belonged to those based in the U.S., as per Inca.
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FTX CEO Sam Bankman-Fried told the Journal that the exchange took steps to identify and remove the U.S.-based users identified by Inca, adding that they only represented about 0.01% of FTX’s trading volume.
The traders are primarily using virtual private networks, or VPNs, to circumvent U.S. regulations, as per Inca.
Benzinga’s Take: Cryptocurrencies have been seeing extremely high volatility in recent months — crashing significantly after hitting all-time highs.
The Commodity Futures Trading Commission reiterated its warning against trading on offshore exchanges in a statement to the Journal, saying customers “will likely have little or no protection if they trade with unregistered firms that operate outside the U.S.”
There has been a surge in trading of “altcoins — ” as minor cryptocurrencies are often called, spurred by an interest in Dogecoin and knock-off meme coins like Shiba Inu (CRYPTO: SHIB), which carry significantly higher risks than established counterparts like Bitcoin and Ethereum (CRYPTO: ETH).
See Also: Why Is Dogecoin Moving Today?
Dogecoin, for example, is up 3406% on a year-to-date basis but down 73% from its all-time high of $0.7376 hit in May.
Bitcoin is up 32% on a year-to-date basis but down 40% from its all-time high of $64,863.10 hit in April.
Price Action: Dogecoin traded 3% lower at $0.1994 at press time. Bitcoin traded 3.78% lower at $38,773.81.