What Is ‘Index Manipulation’ Risk in Crypto Futures?

Index manipulation risk is the danger that a bad actor could intentionally influence the price of one or more spot exchanges that contribute to the futures settlement index. By executing large, coordinated trades on a constituent exchange, they could temporarily inflate or deflate the index price, potentially profiting from futures contracts that settle against that manipulated index.

Exchanges mitigate this by using volume-weighted averages from many reputable sources.