The U.S. Securities and Exchange Commission (SEC) along with the Financial Industry Regulatory Authority (FINRA) have begun a detailed examination of the trading activity of companies that have announced intentions to acquire cryptocurrencies. Regulators are noting a significant increase in trading volumes ahead of official announcements, which may indicate potential violations of disclosure standards.
This is reported by Business • Media
Possible Signs of Insider Trading
American financial institutions are concerned that information regarding future acquisitions of digital assets may have become accessible to a limited group of individuals before public disclosure. This potentially violates the Regulation Fair Disclosure (Reg FD), which prohibits selective access to information that significantly impacts the market value of stocks. FINRA has sent official letters to companies, which is typically the initial stage of investigations into insider trading cases.
“FINRA has sent letters that usually indicate the start of an insider trading investigation. As explained by David Chase, a former SEC attorney, this could be the first step in a deeper analysis of the actions of companies or investors. However, it is currently unknown whether the investigation pertains to specific individuals.”
Impact of MicroStrategy and Growth of Corporate Investments in Crypto-Assets
A significant impetus for this trend has been MicroStrategy, which has integrated Bitcoin into its financial strategy. Its example has been followed by over 200 companies that are raising funds through the issuance of stocks or bonds for further investment in cryptocurrencies. According to Architect Partners, the total amount of reported investments has exceeded $100 billion.
In many cases, companies conducted preliminary consultations with private investors, signing non-disclosure agreements. However, sometimes information about large deals emerged in the public domain before official announcements, leading to a rapid increase in the stock prices of such companies. Legal experts emphasize that such leaks not only attract the attention of regulators but also complicate the determination of the fair market value of securities.
Previously, Pantera Capital CEO Dan Morehead predicted that geopolitical opponents of the U.S. might start creating their own Bitcoin reserves.