SEC writes crypto exchanges over insider trading SEC writes crypto exchanges over insider trading
In a May interview, SEC chairman, Gary Gensler, had said that some crypto exchanges were providing services that could be against their customer’s interest.
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Updated: Jun. 15, 2022 at 2:22 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
A tweet from Eleanor Terrett, a business journalist at Fox, has said that the United States Securities and Exchange Commission (SEC) has written several crypto exchanges about “insider trading safeguards.”
🚨SCOOP: Industry sources with knowledge of the matter tell me the @SECGov has sent letters to several crypto exchanges inquiring about a lack of insider trading safeguards.
— Eleanor Terrett (@EleanorTerrett) June 14, 2022
Authorities ramp up insider trading investigations in crypto industry
Terrett’s tweet shows that U.S. authorities are increasingly interested in curbing malicious players from using privileged information to their advantage.
The letter is unsurprising because during a Bloomberg interview in May, the commission’s chairman, Gary Gensler, said that some crypto exchanges were providing services that could be against their customer’s interests.
In his words,
“Crypto’s got a lot of those challenges — of platforms trading ahead of their customers. In fact, they’re trading against their customers often because they’re market-marking against their customers.”
Is Nate Chastain’s charges the first of many?
Earlier this month, U.S authorities brought a landmark case against a former executive of OpenSea, Nate Chastain.
The U.S. Department of Justice charged him with using privileged insider information to enrich himself.
If convicted, Chastain faces up to 20 years in jail.
At the time, the U.S. Attorney in charge of the case, Damian Williams, said the government was committed to
“Stamping out insider trading – whether it occurs on the stock market or the blockchain.”
According to Jeffrey Roberts, a former prosecutor in the U.S. Attorney’s office, the charges against Chastain could be the
“Beginning of a major sweep focused on the use of inside information relating to transactions in cryptocurrency tokens and other digital assets.”
Meanwhile, several reports have emerged against some top crypto exchanges and politicians over allegations of insider trading, an act they vehemently deny.
The SEC’s letter is coming when the crypto industry is trading at a low that was last seen in January 2021. The industry’s market cap is below $1 trillion, and flagship digital assets like Bitcoin and Ethereum are trading under $23k and $1200 each.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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OpenSea is a decentralized peer-to-peer marketplace for buying, selling, and trading NFTs.
