Recently, we have observed irregular and significant losses in the value of certain tokens. These movements raise an important question: where is the line between market manufacturing and market manipulation? Dr. Rast Rast Tavus, the founder and CEO of Legalblock warns that certain market activities cannot be classified as routine operations and should rather be considered a manipulation.
To start, it is essential to understand what market manufacturing means in the context of cryptocurrency. Market manufacturers receive a considerable amount of tokens and provide cash on specific trading pairs, allowing retail investors to buy and sell more easily. In return, they are generally compensated by tokens or through paid agreements with the transmitter or the exchange of tokens.
The objective is to create a liquid market which allows investors to negotiate with a minimal shift, while exchanges draw transaction costs and tokens issuers benefit from higher demand. Ideally, this creates a win-win situation for all the parties involved.
However, recent examples suggest that some decision -makers can manipulate the prices of tokens for the benefit of their own positions.
Binance recently raised concerns about a market market that would have achieved around $ 38 million in profits from the moving list, while simultaneously influencing its price.
Market manufacturers should improve liquidity, not distort it. They are contracted to promote a stable commercial environment, not to take measures that destabilize it. In this case, behavior seemed to prioritize the personal gain on the creation of a functional market.
The token issuers and the project teams should never engage directly in activities related to the prices involving their own tokens. A recent incident involving Mantra Network’s $ OM token serves as a warning. The token lost about 90% of its value in a single day.
It seems that the team behind the project sold tokens at a lower price in order to create an artificial ascending pressure. With a major unloading support in an aggressive manner, the market has not absorbed the offer, resulting in a devastating collapse. This suggests that the previous ascending movement had also been manipulated, rather than reflecting a real demand.
When a project emits a token, it is generally accompanied by a white paper describing the planned usefulness of the token. The direct involvement in pricing actions undermines this goal and casts doubt on the legitimacy of the token. There is no rational reason to manipulate the price of a token which serves a real function. Such behavior endangers retail investors and invites a legal examination.
The United States Ministry of Justice has already announced surveys on suspicious price movements in the cryptocurrency markets. The Federal Bureau of Investigation would have created its own token to interact with market manufacturers – an indication of their commitment to monitor pricing dynamics and their impact on retail investors.
Despite the decentralized nature of the crypto, the United States affirms that competence in the markets of the DEFI and wider cryptocurrency. The unnatural price measures taken by market manufacturers, tokens transmitters or exchanges could soon lead to criminal surveys.
To remain in accordance with American laws and regulations, all market players must avoid any activity which could be interpreted as manipulation and which can lead to financial damage for retail investors.
