Cryptocurrency spoofing is an activity that was quite common during the early days of cryptocurrencies. It may also be seen today in those exchanges that are not as regulated as the average crypto exchange.
People do crypto spoofing by placing a large fake order to influence the price of their coins artificially. They can fake a buy or sell order that moves the value of their cryptocurrency in a beneficial direction.
Let’s use an example. If a whale intends to increase the value of the token, it can set large buy orders to trick investors into panic buying the said token. When this happens, the value of the token rises, and the whale will instantly remove the buy order and then sell the tokens for a higher price.
Cryptocurrency spoofing can be attained by creating the illusion that the market is optimistic or pessimistic. Human beings tend to make decisions based on emotions, and criminals use them to their advantage.
The aim of this is to trick other investors to purchase or sell their tokens, thereby artificially changing the value of the tokens. After the trader places the buy order and increases the value of the token, they instantly cancel the order and the value of the coin heads to the direction that they want.
Usually, when a criminal undergoes spoofing, they accompany it with wash trading. Spoofing is similar to wash trading, as they have the same intention of manipulating the value of the token artificially.
They are different because they possess different styles of implementing them. In spoofing, the criminal creates a fake order that they cancel once the value of the token moves to their advantage. As for wash trading, the criminal trades with themselves, manipulating the market into thinking that a whale has demanded or sold a large number of tokens.