We have recently prevented a market spoofing attempt on our exchange with the help of complex security measures and our team’s expertise. In light of this event, we want our customers to be aware of market manipulations specific to cryptocurrency trading.
Moreover, we want to send a clear message to anyone who might plan to initiate or participate in market spoofing of any kind on the CEX.IO exchange.
The security of our users is our primary focus, and we make every possible effort to ensure our reliability and reputation. We closely observe the market, the behavior of individual participants (if necessary), and possibilities for market abuse and manipulation.
What is market manipulation?
Market manipulation refers to any activity aimed at distorting the price or trading volume of an asset. Through their activities, manipulators create artificial market conditions, and as a result, other market participants get misleading information. Under these conditions, traders may unknowingly engage in activities that profit manipulators but create a loss for other market participants.
Types of manipulation
There are several techniques that may be used to shift the value of Bitcoin or any other cryptocurrency: front-running, wash trading, shilling, spoofing, layering, churning, quote stuffing, and more. We’ll explain these strategies in a simplified form.
– Front-running, also called tailgating, is the practice of creating an order and making a profit based on knowledge of a large upcoming transaction that will affect the price of the asset.
– Wash trading refers to using personal funds to buy and sell from oneself to create an impression of greater market activity.
– Shilling involves generating false hype around a particular coin for personal gain or in exchange for payment from another party.
– Spoofing means placing limit orders and removing them before they’re executed to distort the perception of demand and supply.
– Layering involves placing and cancelling orders that one would not have executed with the aim of influencing the cryptocurrency price.
– Churning means conducting excessive trading in a client’s account mainly to generate commission.
– Quote stuffing refers to creating and closing a large number of orders in an attempt to flood the market and cause confusion in order to create trading opportunities for high-speed algorithmic traders.
What we do to protect your money
We believe that financial markets should have fair and transparent conditions for all market participants. We do our best to prevent any activities that may harm the cryptocurrency market or the majority of investors.
We do this by:
- using market surveillance to prevent, monitor, and detect manipulation in any form
- meeting standards for financial markets
- cooperating with regulatory bodies, such as the Financial Conduct Authority (FCA), to make sure that any fraudulent activity is investigated and punished according to British law.
Market manipulation may result in criminal charges with outcomes varying from fines to a prison sentence.