Bitcoin slipped about 2 percent following a report that the US Securities and Exchange Commission (SEC) is investigating the digital currencies market.
The virtual currency then clawed back some losses to trade at $10,654 as of 9:25am GMT.
People familiar with the matter said that as part of the SEC’s investigation, the regulatory agency has issued “scores of subpoenas” to obtain information from technology companies and advisers tied to the virtual currency trade.
The SEC is looking into the structure for sales and pre-sales of initial coin offerings (ICOs) which are not as heavily regulated as public offerings. ICOs allow cryptocurrency start-ups to raise funds through the issue of digital tokens.
The SEC has previously launched inquiries suggesting that many token sales and ICOs may be violating securities laws.
Earlier this month, the SEC Chairman Jay Clayton pledged increased scrutiny on companies that seek to “capitalize on the perceived promise” of an increased stock value following an announcement of investment in cryptocurrencies and blockchain technology.