Insider trading a concern for crypto.
From a layman’s perspective, Insider Trading is a term denoted to a type of trading done by the investors using some of the confidential information about the asset, to one’s own advantage. In cryptocurrency market, there have been a lot of speculations that insider trading is consistently active in crypto exchanges.
In crypto, the volatile nature of the market takes control of the asset and encourages the investors or the personnel of the company to indulge in insider trading to reap maximum benefits before the prices fall down. The statutory body of US SEC, which regulates stock, also looks after crypto.
The US Securities and Exchange Commission intervention in crypto to prohibit insider trading.
The US SEC has reportedly begun its investigation into whether cryptocurrency exchanges involve into insider trading, whether they have necessary safety measures to curb the instances of insider trading.
According to one of the sources, SEC has gone ahead and sent a letter to a major crypto exchange asking them to explain about the insider trading laws and regulations and the steps to curb such instances. The inquiry is meant to cover additional exchanges as well.
Crypto crash in May influenced the letter from SEC.
Since the crypto market crashed in May, there have been a lot of speculations about insider trading in a lot of crypto exchanges. To curb such situations of insider trading SEC went on to send a letter to one of the major crypto exchanges. It is believed that, the letter was sent following last month’s collapse of Terra’s UST and its sister token LUNA.
No official report yet.
When asked to SEC about the report, SEC declined to comment. When asked to Binance and Coinbase, which happen to be two of the biggest cryptocurrency exchanges, they also declined to comment. Crypto exchanges such as FTX and Crypto.com did not respond to numerous requests for comment.
SEC is worried about serious infringement of laws.
It is quite unclear in terms of the inquiry. It is not clear that whether SEC’s enforcement division is running the inquiry or Office of Compliance Inspections and Examinations, which often conduct preliminary examinations of areas of regulatory interest. But, if it proves to be SEC’s probe to conduct the inquiry, then it would be justified that SEC is really worried about infringement of regulatory rule and regulations.
Writer’s report.
Yes, it is quintessential to find out whether insider trading played a role during the market crash or not. The market crash saw billions of dollars wipe out in the market where investors saw their life savings, savings made for education burnt down to ashes. If the exchanges knew about the market situation and used it to their advantage, then the person responsible for such a violation should surely be penalized.
