The U.S. Securities and Exchange Commission has sent letters to several crypto exchanges asking for details on insider trading safeguards. The SEC seeks to protect investors after the crypto market crash on Monday led to more than $1 billion in liquidations, with Bitcoin (BTC) and Ethereum (ETH) diving more than 15% and 17%, respectively.
SEC Questions Lack of Insider Trading Protections at Crypto Exchanges
Fox Business journalist Eleanor Terrett announced in a tweet on June 14 that the SEC has sent letters to seek information on the lack of insider trading protections at crypto exchanges. The tweet reads:
“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.”
As many insider trading cases surfaced in the crypto market, the SEC might be looking for further regulations to protect investors. Previously, the SEC had asked crypto exchanges to register and report financial information. The SEC Chain Gary Gensler had also attacked crypto exchanges for trading against customers. Moreover, amending the definition of an “exchange” for purposes of the Securities Exchange Act.
According to Naeem Aslam, chief market analyst at Avatrade, financial lawmakers had always added restrictions on the withdrawal of fiat currency during a serious panic in the market. He thinks the same logic could help regain confidence among crypto traders.
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Furthermore, the SEC is investigating several crypto companies including Binance crypto exchange’s ICO of BNB and Terraform Labs and its founder Do Kwon on unregistered securities. In fact, the OpenSea insider trading case might cause the SEC to regulate NFTs as securities.
Crypto Market Under Pressure Amid Selloffs
The crypto market cap has fallen below 1 trillion as a result of the market crash seen yesterday. The Bitcoin (BTC) and Ethereum (ETH) prices continue to drag lower on Tuesday, with BTC falling to $20,950 and ETH to $1094, the lowest value in the last 24 hours.
The SEC should be looking to safeguard investors by forcing crypto exchanges to improve investor protection and prevent insider trading.
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