Laughs cruelly seeing German taken in by wrong signs (8)
I believe the answer is:
sniggers
'laughs cruelly' is the definition.
(to snigger is to laugh mean-spiritedly)
'german taken in by wrong signs' is the wordplay.
'german' becomes 'ger' (abbreviation).
'taken in by' indicates putting letters inside.
'wrong' is an anagram indicator.
'signs' with letters rearranged gives 'snigs'.
'ger' going into 'snigs' is 'SNIGGERS'.
'seeing' is the link.
(Other definitions for sniggers that I've seen before include "Half-suppressed scornful laughs" , "Disrespectful laughs" .)