HFT firms are re-applying a lot of techniques that worked a decade or more ago in regular markets, except now there's way less competition and way less regulation. They are making a killing right now in crypto.
Watching the full depth order book on any crypto exchange is like “Back To the Future”.
The rules we have are pretty bent. Everything is geared towards transparency but if algos work out your trades are actually moving the price, the liquidity is gone. So vanishing liquidity is okay, but spoofing isn't? Hiding your intention is an innate part of markets, and is a way to defend yourself against other traders.
I actually support more consumer protection, the pump and dumps indicate that some consumers shouldn't be in these markets. But trading has always been the Wild West (and still is but the banditos run the town instead of the Sheriff now).
HFT bonuses (many HFT firms trade crypto now) have been crazy since 2020. Even infra SWEs are making 7 figures of TC.
Traditional HFT market-making is still somewhat competitive in crypto, and it's not helped by the fact the exchanges aren't sufficiently technologically literate to provide a fair playing ground for all participants.