What if Huobi now has a system in place that would only let the price fluctuate 50 yuan a day? To protect its traders?
edit: I know it sounds crazy but we are dealing with an exchange in distress here.
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fake sells as soon as price rises too much and fake buys as soon as price drops too much? Or stop processing buy or sell orders as soon as max or min price for that day has been reached?
edit: like I said before it is far fetched, but it would kill volatility
A really fake transaction is possible only within the real spread, so it cannot change the price beyond those bounds. I believe MtGOX did that to suggest that the price was rising when there was no volume, OKCoin does that perhaps to increase volume, and other exchanges do that to mask the absence of real trades. That may be why the charts of Bitstamp etc. look like broad bands rather than thin staircases (like BTC-China used to be in the voucher era).
To stop the price from rising beyond a certain limit the exchange would have to do
real sales of BTC at that chosen price. That would cost the exchange an unbounded amount of BTC, since every buyer who was willing to pay a higher price would buy into the exchange's wall. Ditto for the other direction.
After one of the large crashes (forgot the year), real stock exchanges implemented a safety switch that stops trading automatically if the price changes too much too fast. But that cannot be abused: the exchange's job is to make trading possible, if the clients want the price to be X the exchange must let them do it.