What Role Do Options Trading and Financial Derivatives Play in Crypto Market Manipulation?

Crypto derivatives, including options and futures, offer leverage, amplifying the impact of price movements. Manipulators can use large, leveraged derivatives positions to profit from price swings they cause in the spot market.

Front-running a large spot trade can be executed to profit from an options position, or vice versa. The high leverage and interconnectedness between spot and derivatives markets make them attractive targets for manipulation schemes like spoofing and front-running.

This interconnectedness necessitates robust cross-market surveillance.