Exchange rate manipulation refers to intentional actions taken to alter the value of one currency relative to another. Such actions typically involve large-scale buying or selling of currencies, or policy adjustments, to achieve a desired economic outcome. In digital asset markets, it can manifest through coordinated trading activities or algorithmic strategies designed to influence token prices. These efforts distort fair market valuations and can create artificial price movements.
Context
Exchange rate manipulation remains a significant concern in both traditional and digital financial markets, drawing scrutiny from regulators worldwide. Within crypto news, it often relates to allegations of market rigging, wash trading, or the use of stablecoins to affect the price of other cryptocurrencies. Ongoing debates address the effectiveness of decentralized governance and automated market makers in mitigating such manipulative practices.
A critical flaw in a newly deployed ERC4626 vault's exchange rate calculation allowed an attacker to drain $9.8 million by manipulating perceived collateral value.
A rounding error in an hToken contract, combined with low liquidity, enabled an attacker to manipulate exchange rates and drain millions via flash loans.
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