Report: U.S SEC probe crypto exchanges on insider trading

By: Mark Jessy

Report: U.S SEC probe crypto exchanges on insider trading

June 15, 2022 4:38 AM

The U.S Securities and Exchange Commission( SEC) has reportedly launched a probe to ascertain how crypto exchanges are working to stave off insider trading.


The commission could be carrying out routine check on the exchange in question, or it could be seeking for precise compliance breaches to hold on to.

According to a FOX Business report on June 15, a person with firsthand knowledge of the SEC’s exercise told that the commission had dispatched a letter to a major crypto exchange asking details on how the exchange protects users from insider trading. The source believes the same letter has been dispatched to numerous crypto exchanges as well.


It isn't crystal which exchange or exchanges have received the query, but the news outlet Forbes said Coinbase, Binance, FTX, and all rejected to reflect. The SEC has also rejected to verify the probe.

The tone of the request is also unclear. The SEC could be seeking out leads to litigate against an exchange’s possible legal offenses via the enforcement division, or it could be a common compliance check through the Office of Compliance Inspection and Examinations.


Allegations of insider trading at the largest nonfungible token( NFT) marketplace OpenSea have captured the attention of the SEC in recent weeks. According to a Cointelegraph report the commission could eventually tag NFTs as securities after complaints of insider trading to OpenSea’s former product director Nathanial Chastain came up.

Partner at the Hogan & Hogan law firm Jeremy Hogan narrated to FOX Business that the SEC’s current interest in exchanges may stem from the allegations of insider trading on tokens that were slated for listing and were probable to witness a price gain. Hogan said its the order of trading that the SEC might be cautioning the exchange they need to get a hold of.


The suggested Digital Commodity Exchange Act of 2022 would witness the SEC retain its presumed governance over crypto exchanges rescinded. However, the bill would offer the Commodity Futures Trading Commission( CFTC) authority over crypto exchanges and stablecoin providers, If it passes.

Going by the current market conditions and ongoing scandals in the crypto space may have catalyzed the SEC’s judgment to start the inquiry. Beforehand last month, the Terra ecosystem imploded, after the Terra USD stablecoin depegged and the LUNA cryptocurrency lost 99.9% of its value.


In addition, decentralized finance staking and lending protocol Celsius has been under fire for freezing user withdrawals as rumors swirl around its possible bankruptcy amid huge transfers of bitcoin into FTX.