Detecting Market Manipulation & Insider Activity
What Is Market Manipulation?
Market manipulation generally involves behaviour intended to create a misleading impression of supply, demand, price, or market activity.
Potential patterns include:
Wash trading
Spoofing
Coordinated buying
Coordinated selling
Pump-and-dump activity
Artificial volume
Liquidity manipulation
Misleading promotional campaigns
The exact legal definition varies by jurisdiction and market.
What Is Insider Activity?
Not every profitable trade by someone connected to a project is insider trading.
The investigation needs to establish several things, including:
What information was known?
Was the information material?
Was it non-public?
Who had access to it?
When did they trade?
What relationship existed between the trader and the project?
Is there independent evidence supporting the connection?
A Basic Investigative Timeline
Construct a timeline:
Private information allegedly obtained
↓
Wallet receives funds/tokens
↓
Public announcement
↓
Market movement
↓
Wallet sells
↓
Price reaction
The timeline doesn't prove misconduct.
It helps determine whether further investigation is justified.
Look for Repeated Behaviour
One transaction can be meaningless.
Repeated patterns are more significant.
Look for:
Multiple wallets behaving similarly
Similar trade sizes
Coordinated timing
Shared funding sources
Trading immediately before announcements
Repeated profitable activity around major events
Calculate Rather Than Speculate
Where possible, quantify:
Entry price
Exit price
Token quantity
Realised proceeds
Percentage return
Time between transactions
Percentage of circulating supply involved
Numbers make an investigation more objective.