No. PMTP is not market manipulation because it is not deceitful and because it does not interfere with the ability of supply and demand to set prices in cryptocurrency markets. The precise definition of “market manipulation” varies by jurisdiction, but the term generally refers to practices that distort security prices or trading volume with the intent to deceive people or entities that rely on information in the market. Legal prohibitions on market manipulation exist because manipulation generally involves fraudulent conduct and because it disrupts the orderly function of markets and thereby reduces investor confidence. Common forms of market manipulation include either spreading false information designed to affect the price of an asset (as in so-called ‘pump and dump’ schemes) or engaging in manipulative transactions that are designed to impact prices rather than to acquire or sell an asset, such as matched trading, wash sales, layering, spoofing, and marking the close. PMTP is not market manipulation. There is no fraud or deceit involved because PMTP is completely transparent: PMTP is described in detail in the materials posted here, the entire Sifchain code including PMTP is open-source, and the current PMTP setting is prominently displayed on the Sifchain DEX. PMTP does not involve spreading false information or engaging in any type of transaction, let alone transactions designed to manipulate prices. PMTP is also not market manipulation because it does not interfere with the ability of supply and demand to set prices, either on the Sifchain exchange or in cryptocurrency markets more generally. First, Sifchain’s own pricing algorithm still uses supply and demand to set prices in a manner similar to other exchanges, and then PMTP makes small adjustments to those prices. The resulting prices are still anchored to prices set by the fundamental market forces of supply and demand. Second, Sifchain is not the sole marketplace for any of the assets listed on the exchange. If individuals are not satisfied with the prices listed on the Sifchain exchange, they can utilize other exchanges. If asset prices on Sifchain diverge from asset prices on other exchanges, that divergence will create an arbitrage opportunity and market forces will naturally bring those prices into balance based on supply and demand.
A helpful analogy might be to a fiat currency exchange, such as one you would find in any international airport. The fiat currency exchange, like Sifchain, will list a series of prices for various foreign currencies that can be exchanged for the domestic currency. As with Sifchain, a customer can swap any two foreign currencies by first acquiring the domestic currency and then exchanging it for a different foreign currency. The exchange may adjust foreign currency prices upward or downward as compared to the domestic currency based on factors other than market forces, typically in order to generate revenue. These price adjustments, like PMTP, do not constitute market manipulation because they are not deceitful and do not interfere with the market’s ability to set prices based on supply and demand – either at the exchange or in the market more broadly. Note: This does not reflect the opinion of a national financial regulator. Please seek your own legal counsel for further analysis.