Spoofing is a form of trading manipulation in which a trader usually sends repeated buy or sell orders and cancels them quickly away from the actual market price, to create the impression the market is within the vicinity of the bid/ask price which does not actually exist.
The Dodd-Frank Act of 2010 forbids spoofing. The practice came into vogue as traders found they could transmit orders quickly and cancel them fast, as the speed and power of computers gained.
The investigation being led by the Department of Justice comes on the heels of last week’s announcement via a coordinated effort by U.S agencies called ‘Operation Clean Sweep’ which is actively looking into Initial Coin Offering scams.
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Cryptocurrencies recent broad market slump started shortly after the Consensus summit ended in New York City. The combination of ‘Operation Clean Sweep’ and the developing news that the Department of Justice is investigating spoofing has not help trading sentiment.
Yaron Mazor is a senior analyst at SuperTraderTV.
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