Cryptocurrency market manipulation schemes are becoming increasingly coordinated

As cryptocurrency market manipulation continues to grow, highly organized networks coordinate complex schemes across exchanges, threatening the integrity of the market. Collective vigilance and data sharing can protect the ecosystem.

Market manipulation is everywhere, yet nowhere to hide. It is an invisible threat that affects both crypto and traditional markets, eluding the average trader at all costs. Sometimes the manipulation is obvious—illiquid tokens are hyped up high and then dumped just as quickly—but often it is more subtle and harder to detect.

More worryingly, these schemes are no longer the domain of rogue whales or amateur pump groups. There are growing signs that organized, well-funded networks are coordinating activities across centralized exchanges, derivatives platforms, and the on-chain ecosystem. As these actors grow in sophistication, the threat they pose to market integrity grows exponentially.

An old story

Market manipulation is as old as markets themselves. In ancient Greece, a philosopher named Thales of Miletus used his knowledge of weather patterns to predict the olive harvest season and quietly rented all the olive presses in the area at low prices before the season began. Then, when the harvest season arrived and demand for the presses surged, he rented them out at high prices, pocketing the difference.

A more recent historical example, albeit 300 years ago, could be the South Sea Company bubble, when company directors sold shares at the height of their value, leaving ordinary investors penniless. Or the Dutch tulip bubble a century ago.

Market manipulation has been present in the cryptocurrency space since the first exchanges came online around 2011. Those of you who were there may remember the pump-and-dump scheme orchestrated on the BTC-E exchange by a notorious trader named Fontas. Or they might remember Bear Whale, whose 30,000 BTC sell wall brought the market crashing down when total daily volume for all cryptocurrencies combined was less than $30 million. While this wasn’t technically market manipulation, it showed how easily one person could move the crypto market.

Today, cryptocurrencies are a multi-trillion dollar asset class, and it’s nearly impossible for a single person to manipulate large-cap assets. But it’s still possible to shake up the market when a group of nefarious traders join forces — and well-organized insiders are doing just that.

Manipulators in Action

Long gone are the days when a single whale could take weeks to bring down a BTC sell wall. Today, cryptocurrencies are far more liquid, but also more dispersed. This creates opportunities for enterprising traders to hunt in packs and move the market in their favor. They often coordinate their activities through private Telegram groups, targeting markets where they can have the most impact. The trend highlights the growing involvement of major players in market manipulation schemes, bringing new risks to the cryptocurrency industry.

In February, analyst James CryptoGuru warned that spot Bitcoin ETFs are at risk of large-scale manipulation. He explained that these instruments could put downward pressure on Bitcoin prices — especially at a time when traditional financial markets are closed. Such a strategy could trigger liquidations among leveraged traders and create a temporary imbalance that allows big players to accumulate BTC and ETH at a discount.

Because cryptocurrencies, both on-chain and on-exchange, are highly interconnected, the ripple effects of successful manipulation extend farther and wider. If a trading pair that is available to other markets through an application program interface (API) on a centralized exchange is disrupted, arbitrage opportunities can be created elsewhere, including in perps markets. As a result, an attack can be launched on one exchange and profit on another, making it difficult to catch the culprit.

The integrity of the cryptocurrency market is at greater risk. Coordinated groups have deep pockets, technical tools, and cross-platform access to execute and mask sophisticated operations. Worryingly, most exchanges remain passive by design because it is nearly impossible to prevent market manipulation. As a result, there is a good chance that attackers will maintain their advantage even as the window in which they can freely wreak havoc shrinks.

Not all manipulators break the rules

Just as it wasn’t against the rules for Thales of Miletus to profit from the olive season, many of the behaviors that constitute cryptocurrency manipulation aren’t illegal. Is it manipulation when a large fund starts buying a certain token through one of their public wallets to attract attention? Or when a market maker goes beyond simply matching the bid-ask spread and actively pumps up the price of a token at the behest of a project? Many things can move markets, but most aren’t illegal—at least not yet.

The ethics of influencers, market makers, trading firms, and other players at scale can be debated at length, while other cases don’t require such nuance. Last time anyone checked, using thousands of exchange accounts comprised of dozens of users to pump up the price of a certain asset was blatant manipulation. Exchanges are fighting back, aided by increasingly sophisticated AI tools.

The days when a single user could cause chaos in a market may be over. However, in the multi-chain, multi-exchange era, the threat has not disappeared, but has multiplied. As a result, exchanges are now left playing a game of whack-a-mole, trying to detect suspicious behavior from hundreds or thousands of accounts simultaneously.

Thankfully, exchanges don’t have to go it alone, as evidenced by successful collaborative examples. When Bybit was hacked in early 2025, other platforms stepped in to lend ETH and help it meet withdrawal obligations—a rare and powerful signal of solidarity in the face of a crisis.

As well-funded and well-organized groups continue to test the system, one thing is becoming clear: it may be relatively easy to manipulate the market, but it is increasingly difficult to do so undetected. Collective vigilance, data sharing, and early detection are becoming the most effective tools for protecting the integrity of the cryptocurrency trading ecosystem.