How Does a CEX Distinguish between Legitimate Arbitrage and Malicious Front-Running? ⎊ Path

How Does a CEX Distinguish between Legitimate Arbitrage and Malicious Front-Running?

A CEX's surveillance system distinguishes between the two primarily by analyzing the intent and mechanism of the trades. Legitimate arbitrage involves simultaneous trades across different markets to profit from a price difference.

Malicious front-running involves an internal actor or an external bot exploiting non-public order information or manipulating the execution order to profit from a price change caused by another user's trade on the same exchange. The key is the use of privileged information or manipulation of the execution sequence.

What Is the Risk of “Information Leakage” in a CEX’s Derivatives Clearing Process?

Can an HFT Firm Be Accused of Front-Running, and under What Circumstances?

What Are the Risks of a ‘Governance Attack’ Where a Malicious Actor Manipulates the Oracle and the DAO Vote?

How Does Latency Arbitrage Differ from True Front-Running on a CEX?

What Is the Role of an Order Book in Preventing or Facilitating Front-Running on a Centralized Exchange (CEX)?

What Are the Ethical Implications of Profiting from Information Asymmetry?

What Is the Difference between Front-Running on a CEX versus a DEX?

How Does Front-Running Relate to Information Leakage in Public Crypto Markets?