How Can Time-Stamping Be Compromised by an Internal Actor on a CEX?

An internal actor could compromise time-stamping by tampering with the exchange's internal clock synchronization system (e.g. the PTP master clock) or by manipulating the software that records the time-stamp for their own proprietary orders. This would allow them to falsely record their trade as preceding a client's order.

However, exchanges use redundant, secured, and externally audited time sources to make this extremely difficult.