April 17th, 2025

The Dark Side of Altcoins: Collusion, Price Manipulation, and the CEX Problem

The cryptocurrency market, once a beacon of hope for financial innovation and transparency, is now facing a crisis of confidence that threatens its very foundation. As we move through 2025, it has become obvious that the altcoin sector is plagued by a toxic mix of collusion, price manipulation, and a glaring lack of transparency—especially on centralized exchanges (CEXs). The result is a market that feels increasingly rigged, where genuine price discovery is rare and retail investors are left holding the bag. I watched this industry evolve from its idealistic beginnings to its current state, I believe the time for self-reflection and reform is now, before the damage becomes irreversible.

The Mechanics of Manipulation in 2025

The most insidious problem in today’s altcoin market is the collusion between project teams and market makers. In theory, market makers are supposed to provide liquidity and stability, but in practice, many have become partners in manipulation. The process is disturbingly simple: project teams allocate large amounts of tokens to market makers at deep discounts before a token generation event (TGE). These market makers then orchestrate artificial price pumps at launch, creating the illusion of demand. Retail investors, seeing the price action, rush in—only to see the token’s value collapse as insiders dump their holdings.

The numbers in 2025 are staggering. In my own observation, most of the newly launch altcoin have lost 95% of their market cap. This is not a fluke or a reflection of poor project quality; it is a direct result of coordinated manipulation. The median altcoin launched in 2024-2025 is down by at around 70% from its TGE price. This pattern is so consistent that it has become a running joke among traders: “Buy the rumor, sell the TGE, and pray you’re not the last one out.”

Centralized Exchanges: The Silent Enablers

Centralized exchanges, which still control roughly more than half of the global crypto market cap, are at the heart of this crisis. Despite their dominance, most CEXs have done little to address the manipulation happening on their platforms. The incentives are clear: listing fees and trading volumes are lucrative, and exchanges benefit from the volatility and hype that manipulated launches generate.

Transparency is sorely lacking. While some exchanges have made token efforts to publish proof-of-reserves or improve listing standards, these measures are often superficial. The reality is that order books can be spoofed, wash trading is rampant, and the true nature of liquidity is hidden behind closed doors

This lack of transparency is fundamentally at odds with the ethos that drew so many to crypto in the first place. Bitcoin’s original promise was a system where trust was replaced by cryptographic proof and open ledgers. In 2025, the altcoin market feels more like a casino run by insiders than a transparent, decentralized financial system.

This is also reflected in the poll that I have conducted, 82.4% of the respondents think that CEX should held to a higher standard and they should lead by example to help the crypto industry.

The Human Cost: Confidence in Freefall

The impact of this dysfunction is not just financial—it is deeply personal. I have spoken with countless retail investors who entered the market in good faith, only to be burned by the same cycle of hype, manipulation, and collapse. Many have lost significant savings, not because they made reckless bets, but because the system was stacked against them from the start.

This erosion of trust is now quantifiable. According to a poll on X conducted by me, 63% of respondents believe that most altcoin prices are manipulated, and 37% have reduced or stopped investing in new token launches altogether.

The Absurdity of TGE Pricing

Perhaps the most glaring symptom of the current malaise is the absurdity of TGE pricing. In a rational market, the price of a new token should reflect its utility, adoption prospects, and the fundamentals of the project. Instead, TGE prices are set at levels designed to maximize returns for insiders and early backers, with little regard for long-term sustainability.

The result is a predictable crash. New tokens losing more than half its value within the first two weeks of trading become a norm. This is not just a problem for speculators; it undermines the entire process of capital formation and innovation in the crypto space. When every new launch seems like a trap for retail investors, genuine projects struggle to attract long-term supporters.

The Failure of Self-Regulation

For years, the crypto industry has argued that self-regulation is preferable to government intervention. But the events of 2024 and 2025 have shown that self-regulation is, at best, a myth. The industry’s inability—or unwillingness—to police itself has created a Wild West environment where bad actors thrive and honest participants are left disillusioned.

Just this morning, I warned my community that “the industry is eating itself alive,” and that unless meaningful reforms are enacted, both retail and institutional investors will continue to flee. My warning is echoed by community members who acknowledge that the status quo is unsustainable.

The Case for Reform: Transparency and Decentralization

So, what can be done to restore trust and legitimacy to the altcoin market? In my view, the answer lies in a renewed commitment to transparency, decentralization, and investor protection.

First, centralized exchanges must be held to higher standards. This means real-time publication of order flows, full disclosure of market maker relationships, and transparent token allocation data. Exchanges should be required to implement robust surveillance systems to detect and prevent manipulation, and to cooperate with independent audits. Some progress is being made—several exchanges have begun publishing more detailed transparency reports —but these efforts are still the exception rather than the rule.

Second, the industry must accelerate the shift toward decentralized exchanges (DEXs) and on-chain trading. While DEXs currently account for about 25% of trading volume, they offer a level of transparency and auditability that CEXs simply cannot match.

Every trade is recorded on a public blockchain, making it much harder to conceal manipulation. Uniswap v4 and dYdX have shown that it is possible to build liquid, efficient markets without relying on centralized intermediaries.

Based on a poll that I have done, 74.3% of the respondents think the industry must shift to DEX. I believe more and more people understand the importance of decentralization.

Third, token launches need to be fundamentally reformed. This could include longer vesting periods for insiders, transparent allocation disclosures, and mechanisms to ensure fair price discovery—such as open auctions or liquidity bootstrapping pools. Some projects are experimenting with “fair launches,” where tokens are distributed via community-driven mechanisms rather than private sales. While not a cure-all, these approaches represent a step in the right direction.

My Perspective: Why I Still Believe in Crypto

Despite the current malaise, I remain cautiously optimistic about the future of crypto. The technology that underpins digital assets—blockchain, smart contracts, decentralized finance—still has the potential to revolutionize the global financial system. But for that potential to be realized, the industry must confront its demons.

As an observer and participant in the crypto space, I have seen both the best and worst of what this market has to offer. I have witnessed the excitement of genuine innovation, the thrill of new possibilities, and the power of community-driven projects. But I have also seen the damage wrought by greed, collusion, and a lack of accountability.

The choice facing the industry is stark. It can continue down the current path, sacrificing trust and legitimacy for short-term gains. Or it can embrace reform, transparency, and a renewed commitment to the values that made crypto compelling in the first place.

Conclusion: The Road Ahead

The crisis of trust in the altcoin market is not an abstract problem; it is a clear and present danger to the future of digital assets. Collusion between project teams and market makers, abetted by the opacity of centralized exchanges, has created a market where manipulation is the norm and genuine price discovery is the exception. The result is a loss of confidence, a flight of capital, and a growing sense of disillusionment among investors.

But it does not have to be this way. By demanding greater transparency, embracing decentralization, and supporting thoughtful regulation, the industry can chart a new course. The road ahead will not be easy, and there will be resistance from those who benefit from the status quo. But the alternative—a market defined by manipulation and mistrust—is unacceptable.

I urge industry leaders, regulators, and investors to seize this moment. The future of digital assets depends on our willingness to confront hard truths, to demand better, and to build a market worthy of the ideals that inspired its creation. Only then can we restore trust, unlock innovation, and realize the promise of a truly decentralized financial system.

Source: https://www.securities.io/the-dark-side-of-altcoins-collusion-price-manipulation-and-the-cex-problem/

Anndy Lian

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com

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March 1st, 2022

Market Manipulation in the Cryptocurrency Industry

News last week of the first ever seizure of NFTs by the UK tax agency in response to suspected tax fraud was a sign that last year’s booming NFT economy maybe running into some roadblocks in 2022. While recent data show that trade in NFTs rose from $106 million in 2020, to $44.2 billion in 2021, it’s a sign this meteoric rise is attracting the attention of authorities. And in the US, following reports of insider trading in NFTs and price manipulation, crypto-related crimes are the focus of a new National Cryptocurrency Enforcement Team. While there has been a lag in enforcement, as criminal and tax enforcement authorities struggle to play catch up, it’s clear cases of fraud and market manipulation in the crypto market are likely to hit the headlines in ever growing numbers in 2022.

Just last month it was reported that OpenSea NFT marketplace rival LooksRare was experiencing significant wash trading as some traders were taking advantage of its token-based rewards system. LooksRare gives away its own LOOKS token to users who trade in specific collections, worth over $12 million a day back in January. What raised suspicions was the trading back and forth of NFTs for inflated prices, which appears to have been motivated by a desire to boost the share of trading rewards. “Such wash trading tactics to manipulate token rewards distribution may not be illegal, but it’s distorting the data coming out of the marketplace,” argued Andrew Hayward in Decrypt. “LooksRare can tout figures that show significantly higher trading volume than OpenSea, but when the bulk of the top transactions appear to have been executed purely to game the system, the data holds little value,” he added.

The problem of wash trading in NFTs is a critical problem, both for the industry at large as well as for individual investors who want to invest in this exciting asset class without fear of fraudulently inflated prices. The practice of wash trading is when someone both buys and sells the same NFT or cryptocurrency to give the impression of greater trading volume, creating an impression of greater demand; this in turn helps inflate the NFTs price and attractiveness to buyers. In a recent investigation into this practice blockchain experts Chainalysis discovered that 262 NFT sellers had conducted more than 25 times to a self-financed address, in other words wash trading. While more than half the wash traders made a loss, by paying more in gas fees than they made, the investigation found that, “110 profitable wash traders have collectively made nearly $8.9 million in profit from this activity. Even worse, that $8.9 million is most likely derived from sales to unsuspecting buyers who believe the NFT they’re purchasing has been growing in value, sold from one distinct collector to another.”

Of course, market manipulation is wider than the NFT market, and in a relatively unregulated environment this has the tendency to increase the volatility of the market, affecting market sentiment and pricing. Although in principle cryptocurrency and tokenized assets rely on decentralized networks, the dangers of crypto criminal activity force regulators to monitor the crypto sector. Indeed, the market is still so easy to manipulate that even a tweet by a famous influencer. While Matt Damon’s ‘Fortune Favors the Brave’ crypto ad was widely mocked on social media, it underlines the power of celebrity endorsement in the space which shows no sign of changing. In the recent Super Bowl leading marketplace Coinbase spent close to $14m on a simple bouncing QR code-based ad, but the remainder drew heavily on celebrity endorsement, from LeBron James giving advice to his teenage self to comedian Larry David satirizing the fear of missing out in an FTX ad. It’s true the core appeal of NFTs going forward is the way it enables a direct relationship between fans and celebrities, the power of celebrity is also ripe for exploitation.

Within the wider cryptocurrency market, regulators are increasingly focusing on this kind of market behavior with recent warnings to retail investors in Singapore. While the FCA in the UK is currently consulting on concerns about “the ease and speed with which people can make high-risk [crypto] investments by proposing a significant strengthening of its rules on how high-risk financial products are marketed.” Sarah Pritchard, Executive Director of Markets at the FCA, explained the thinking behind the current action in preparation for the UK Government bringing the promotion of crypto investments under the FCA’s remit: “Too many people are being led to invest in products they don’t understand, and which are too risky for them. People need clear, fair information and proper risk warnings if they are to invest with confidence, which is the central aim of our consumer investments strategy.”

Typical market manipulation strategies:

Pump and dump

Pump and dump refer to an individual or a group pooling funds to inflate a token and profit from the price growth, by selling a token once it has attracted the attention of other investors, at an inflated price. While so-called ‘pump and dumps’ have made a lot of money for a few people, the causalities are new investors who are unaware of what is going on are more likely to fall victim and lose their money.

Wash trading

As outlined wash trading is the practice of buying and selling a NFT or token asset to yourself to inflate its volume, which in turn attracts attention and helps inflate prices. There are numerous instances where unregulated exchanges or crypto traders use this method by trading a token in huge volumes for its value to receive attention, distorting the market even further and benefiting the manipulators.

Spoofing

This strategy was prevalent, particularly in the early days of cryptocurrency, and it is still used on small, unregulated exchanges. The approach involves placing a huge order to generate create fake demand. Essentially, the order can influence a bullish or bearish sentiment to the favor the fraudulent trader. Typically, they will place big sell orders to trick novice investors into panic-selling, before removing their sell order and acquiring tokens at a lower price.

How to best avoid market manipulation

The best advice to crypto investors is to conduct thorough research to avoid falling prey to manipulated cryptocurrency projects. You can also cross-check all information about a token to verify and fully understand the factors behind an asset’s movement and price action. Furthermore, traders can make informed selections by sticking to making decisions based on longer term trends rather than recent bias. It’s also critical for you to diversify your portfolios to protect yourself from unforeseen market manipulation, as the likelihood of market manipulation affecting all your crypto assets is low. And to bear in mind that the lower the volume of certain coins is makes them easier to manipulate.

The cryptocurrency market is risky like any other asset trading market. The downside is that continued market manipulation is prompting regulators to step up their efforts to monitor the cryptocurrency market. However, with big money to be made market manipulators will seek to conceal their actions, so investors still need to educate themselves on how to detect and deal with these issues. Within the industry cryptocurrency exchanges are taking the initiative, for example with the recent launch of the Crypto Market Integrity Coalition, to help combat fraud and promote public and regulatory trust. BigONE Chairman Anndy Lian said that in terms of NFTs there needed to be a common industry standard to ensure both ownership and copyright. “I always encourage everyone in crypto to work hard for their holdings. Shill properly, ethically, and smartly. It is a fine line between good shill and spam. My motto is ‘respect everyone’. This is my way of life. But when I see a scam, I will point it out. At the end of the day, it’s a shared responsibility between crypto community members and the teams behind crypto projects.”

Original Source: https://www.securities.io/market-manipulation-in-the-cryptocurrency-industry/