The Risk of Market Manipulation in 24-Hour Markets: What History Shows

Once limited to niche asset classes like foreign exchange and cryptocurrencies, 24-hour markets are becoming the new normal. The New York Stock Exchange (NYSE) Arca has received approval from the Securities and Exchange Commission (SEC) to extend trading sessions to 22 hours per day, five days per week, and the Nasdaq intends to adopt a 24/5 schedule by 2026.

While expanded hours create new opportunities for global participation, history has shown that continuous markets are also more vulnerable to manipulation. Let’s explore where the increased risk comes from, how manipulation has occurred, and what steps you can take to protect yourself as an investor.

Understanding 24-Hour Markets

While traditional stock exchanges operate during set business hours, 24-hour markets remain open around the clock, enabling trading at any time. These markets typically center around globally traded assets, where demand and participation span multiple countries and time zones. Some notable examples include:

• Foreign exchange (forex): The forex market facilitates the trading of national currencies, like the U.S. dollar, euro, and yen. With an average daily trading volume of roughly $7.5 trillion, it’s the largest market in the world, operating 24 hours a day, five days a week, by cycling through major financial centers.
• Crypto exchanges: Cryptocurrencies, like Bitcoin and Ethereum, trade on decentralized exchanges that never close, offering true 24/7 access. For example, Binance is one of the world’s largest crypto exchanges, with roughly $16.74 billion in daily trading volume as of August 2025.

Because 24-hour markets are always open, they’re accessible to investors worldwide, often increasing the number of market participants and overall liquidity. However, participants are also spread across more hours, which can create periods where actual liquidity drops, resulting in greater volatility and slippage.

Nonstop accessibility also means investors can react to economic data, geopolitical events, and other breaking news in real time, which can contribute to more significant overnight price swings.

Additionally, the international and sometimes decentralized nature of 24-hour markets creates regulatory challenges. Since trading often occurs across multiple jurisdictions or outside traditional frameworks, oversight and enforcement can be more challenging.

Mechanisms of Market Manipulation

The continuous nature of 24-hour markets creates additional opportunities for market manipulation. Bad actors can exploit periods of low liquidity during off-peak hours when fewer participants are present and prices are easier to influence.

Some of the most common manipulation tactics include:

• Spoofing: This involves placing large buy or sell orders with no intention of executing them, creating a false impression of demand or supply. Once other traders react and prices shift, the spoofer cancels their orders and capitalizes on the resulting movement.
• Pump and dump: Typically requiring multiple people working together, this involves artificially inflating the price of an asset (the pump) by spreading false information or through coordinated buying, then selling off holdings at the inflated price (the dump), leaving latecomers with losses.
• Bear raiding: Effectively the opposite of the pump and dump, bear raiding involves driving the price of an asset down by spreading negative rumors or through coordinated selling. Manipulators can then profit by buying the asset or covering short positions at a lower price.
• Wash trading: This tactic involves buying and selling the same asset simultaneously to create artificial trading volume and misleading price signals. It’s often used to manipulate rankings on exchanges and attract unsuspecting investors.
• Cornering the market: This strategy involves accumulating such a large portion of a specific asset’s supply that a manipulator can artificially restrict availability, drive prices up, and force other market participants—especially short sellers—to buy from them at inflated rates.

Historical Instances of Market Manipulation

While schemes like spoofing, pump and dumps, and wash trading are common in 24-hour markets—especially in the cryptocurrency space—some of history’s most significant manipulation cases don’t fit neatly into these categories. Here are some high-profile incidents that show the other forms these crimes can take.

The Enron Scandal (2001)

Enron is infamous for its accounting fraud, but the fallen energy giant also manipulated California’s deregulated, 24-hour electricity market through a series of sophisticated trading tactics, with nicknames like “Death Star” and “Fat Boy.”

For example, Enron scheduled electricity to move through congested transmission paths, then collected payment from the state to relieve the congestion it had faked. Similarly, it overstated demand by booking excess electricity that didn’t exist, then sold the phantom surplus back into the market at a profit.

The LIBOR Scandal (2012)

The London Interbank Offered Rate (LIBOR) was a benchmark interest rate set by the Intercontinental Exchange (ICE) that informed loan terms for various credit products worldwide, including auto, student, and home loans.

However, ICE based the LIBOR on daily submissions from major banks. This allowed participants to submit false interest rate estimates, colluding to manipulate the benchmark in ways that benefited their trading positions.

The Forex Scandal (2013)

The forex market was once considered too vast and liquid for manipulation to be possible, leading to relatively relaxed oversight. But in 2013, a whistleblower helped bring to light that traders at some of the world’s largest banks had been colluding for years to influence daily exchange rate benchmarks—key reference rates used to price contracts, investments, and financial products across the world.

These benchmarks were calculated using actual currency trades executed during a 60-second window around 16:00 London time. Traders coordinated large buy or sell orders during this window—a tactic they called “banging the close”—to manipulate benchmark rates, allowing their firms to profit at the expense of clients and the broader market.

Regulatory Challenges and Responses

The global nature of 24-hour markets means trading often occurs across multiple jurisdictions, each with its own set of rules and enforcement capabilities. This makes it challenging for regulators to monitor trading activity comprehensively and coordinate effective responses to suspicious behavior.

Authorities have implemented several measures to address this issue, including:

• Stricter enforcement: Many regulators have increased penalties for market manipulation and are pursuing more aggressive enforcement actions, including criminal charges in severe cases.
• Cross-border organizations: International regulatory groups, such as the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO), facilitate information sharing and enforcement across borders.
• Industry-wide standards: Some 24-hour markets, especially in the cryptocurrency space, have introduced self-regulatory organizations and best practice guidelines to improve transparency and accountability.

Technological Advances and Their Impact

Technology has played a central role in the evolution of 24-hour markets, especially through advancements in algorithmic trading. These complex mathematical models allow participants to execute large volumes of trades at unprecedented speeds across global markets.

Unfortunately, that has empowered manipulators to carry out market manipulation tactics at a scale and pace that traditional monitoring systems may struggle to detect. In cryptocurrency markets, the decentralized and pseudonymous nature of the blockchain makes tracking these kinds of behavior even more challenging.

However, technological innovations have also helped regulators counteract these risks. For example, today’s enhanced surveillance systems leverage technologies like data analytics, machine learning, and artificial intelligence to identify suspicious trading patterns in real time.

Similarly, blockchain’s transparent, immutable ledger can aid investigators by providing a permanent record of all transactions. With enough time and expertise, authorities can trace the flow of assets, uncover connections between accounts, and build cases against those engaging in manipulative activities.

Preventive Strategies for Investors

Instead of relying solely on regulators and exchanges to combat market manipulation, take proactive steps to protect yourself while investing. Consider the following strategies and best practices:

• Keep up with manipulation tactics: Stay informed about common forms of market manipulation, recent cases, and regulatory developments. Understanding how these schemes work can help you spot warning signs early.
• Verify sources of key market data: Always confirm news, price movements, and trading signals using reputable sources. Be wary of investment tips or rumors circulating on social media, forums, or messaging apps.
• Diversify your investment portfolio: Avoid concentrating too much of your capital in any one basket. Diversifying across different asset classes and markets can help reduce your exposure to a single instance of manipulation.
• Use reputable trading platforms: Choose well-established exchanges that have strong security measures, transparent reporting, and a history of regulatory compliance, as they’re more likely to detect and prevent manipulative activity.
• Limit slippage risk with order types: Take advantage of limit orders and stop-loss orders to control your entry and exit points. These can help reduce the impact of volatility during periods of low liquidity.

The Bottom Line

The continuous nature of 24-hour markets provides greater access to global participants, but it also creates vulnerabilities, including regulatory challenges and periods of low liquidity. Bad actors can take advantage of these to manipulate the market, with tactics ranging from small-scale spoofing to collusion between banks.

While regulators are increasingly implementing advanced technologies to help detect and deter abuse, investors should be vigilant when trading in 24-hour markets. Keep up with manipulation tactics, verify information before using it to inform trades, and use risk management strategies like limit orders to protect yourself.