I didn’t think this was possible with standard coinbase. Maybe with coinbase pro you can see the order book but that could in theory be manipulated. If there’s something that easily disproved it I would be interested to see if yo don’t mind sharing.

How could their order book be manipulated?

They're unregulated, so the answer is "in any way they like".

They can't remove real liquidity because then the individual posting an order will realize. They can't add fake liquidity because then the individual who attempts to lift the ghost order will realize.

So how can they do this without getting caught (and they haven't been caught - firms like Alameda are watching closely)?

This sounds like one of those things that's easy to just exclaim but is lacking a mapping to anything specific

Trying to tie it to real liquidity is a strawman. They don't need to manipulate the order book for USD/BTC conversions. They can manipulate options, trades between different crypto currencies, futures and the like.

Here's an article about spoofing and market manipulation of real money in regulated excanges: https://ankura.com/insights/spoofing-market-manipulation-and...

This quote from the above article, does not apply to crypto exchanges so far as I know:

"Rules govern how trading is done. Laws prohibit manipulative trading practices on both securities and futures exchanges."

"To date, no cryptocurrency exchange has registered with the SEC" from https://medium.com/semadaresearch/should-cryptocurrency-exch...

> They can't add fake liquidity because then the individual who attempts to lift the ghost order will realize.

...Unless there's magically someone filling it just before they do (i.e. frontrun by an internal bot) every time they try. I have observed exchanges doing this. I don't believe that Coinbase is one of them, though, as others have pointed out with their positioning they are better of not to.

FTX does a lot of digging into this I think CB are one of the legit ones

You didn’t really answer his question though.

it depends on if the how is functional or espistmelogical.