Market manipulation

Manipulation means trading or spreading information with the aim of moving prices away from where genuine supply and demand would put them. In crypto the common forms are wash trading to fake volume, spoofing and layering to fake order book pressure, coordinated pump-and-dump campaigns, cornering a thinly traded token's supply and pushing prices to trigger liquidations on derivatives venues.

Crypto is exposed because many tokens have small floats, trading is spread across lightly supervised venues and social media can move retail money quickly. In the European Union, MiCA introduced a dedicated market abuse regime for crypto-assets that bans manipulation, insider dealing and unlawful disclosure, and requires platforms to detect and report suspicious orders. In the US, the CFTC and the Department of Justice have brought manipulation cases under commodities and fraud law.

For ordinary traders the practical lesson is that price and volume on small tokens can be engineered. Sudden spikes without news, volume concentrated on one obscure exchange and coordinated promotion are common warning signs.