(Bloomberg) — FTX, the cryptocurrency exchange co-founded by Sam Bankman-Fried, is expanding its partnership with surveillance firm Eventus Systems Inc., seeking to prevent market manipulation in the growing ecosystem of digital assets.
Eventus will provide surveillance and anti-market-manipulation tools for all FTX markets across the globe, executives said in an interview. This comes on the heels of increased pressure from regulators and amid institutional investor appetite for the asset class.
“Smart traders don’t want to play in a market where there is market manipulation going on,” said Jeff Bell, Eventus’s chief operating officer. “There has been an increase in need for trade surveillance. Mostly that’s because the two worlds are starting to collide more than they did in the past.”
Austin-based Eventus provides surveillance services for traditional financial markets and some of the largest U.S. crypto exchanges including Gemini Trust Co., Coinbase and ErisX. The firm started working with FTX US late last year, first providing trade surveillance and risk monitoring for the crypto spot, futures and options markets.
The crypto market is safer than three years ago partly due to the increased use of trade surveillance, Bell said. “The technology is getting stronger. The number of exchanges and their ability to handle capacity is safer from a trading risk perspective,” he said.
Market manipulation is one reason the Securities and Exchange Commission has repeatedly blocked a Bitcoin ETF, which firms like Grayscale Investments have been pushing for approval. A 2019 study alleged that Bitcoin’s rise above $20,000 in 2017 could have been caused by a lone trader.
Insider trading in crypto is an increasing area of focus for surveillance. It could occur ahead of market-moving news such as coin listing decisions, marketing partnerships and changes to protocols, according to Bell. Eventus’s system helps identify suspicious activities from key accounts such as those of exchange employees, core developers and market makers.
Once these activities are identified, the firm sends an alert to exchanges, Bell said. He also expects over time there will be rules from regulators that require firms to file suspicious-activity reports.
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