Crypto Trading Under Scrutiny: Regulators Investigate Suspicious Pre-Announcement Trades
An investigation into questionable trading behavior was started by the SEC and FINRA prior to publicly traded businesses announcing their intention to purchase cryptocurrency. Some investors may have benefited from prior, confidential knowledge of these crypto-treasury announcements, according to regulators. There may be a breach of fair disclosure laws here.
DAT Firms Under Fire: Regulators Investigate Suspicious Pre-Purchase Price Surges
Publicly listed digital asset treasury (DAT) firms—businesses that announce plans to raise money and purchase cryptocurrencies—are the subject of the probe. This year, more than 200 DATs went public, and some of them are presently interacting with authorities. High trading volume spikes were among the questionable trading trends that regulators discovered. Additionally, they saw abrupt price increases in the days or hours prior to businesses announcing their intentions to purchase cryptocurrency. The activities imply that trading on inside information may have been profitable for at least some investors.
SEC Targets Treasury Firms for Fair Disclosure Violations
Several corporations have already received warnings from SEC officials over possible violations of Regulation Fair Disclosure (Reg FD). Instead of requiring selective disclosure, Reg FD mandates that substantial, nonpublic information be made widely available. The financial watchdog is worried that some people sold the companies’ stock before the news release because they were told about upcoming cryptocurrency purchases.
Experts concur that these violations jeopardize market value and expose companies to legal and reputational fallout. Reg FD infractions have never raised such concerns for the agency, even in the bigger non-crypto financial market. As a result, this degree of inspection increases the possibility that crypto-treasury companies could soon be subject to more stringent regulations.
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