The SEC Investigates Crypto Insider Trading

The SEC Investigates Crypto Insider Trading

The SEC has launched an inquiry into the possibility of insider trading at crypto exchanges. The agency has sent a letter to at least one major exchange, asking about its safeguards against such activity.

This is just the latest development in the SEC’s ongoing exploration of the cryptocurrency market. The agency has already brought enforcement actions against a number of companies and individuals involved in the space, including ICOs, exchanges, and traders.

The inquiry into insider trading is likely to be just one part of a broader investigation into the operations of crypto exchanges. The SEC is likely to scrutinize these businesses closely in the coming months and years in order to ensure that they are complying with all applicable laws and regulations.

The launch of the SEC inquiry comes as no surprise to many in the industry, given the agency’s recent actions against a number of companies and individuals involved in the cryptocurrency space. However, it is still unclear what exactly the SEC is investigating, and whether any wrongdoing will be uncovered.

This latest development is likely to add more uncertainty to an already volatile market. Crypto exchanges have come under fire in recent months for a variety of reasons, including lack of regulation, suspicious trading activity, and hacks. If the SEC’s investigation leads to increased regulation of these businesses, it could have a major impact on the way they operate.

In any case, the inquiry into insider trading is just one part of the SEC’s larger exploration of the cryptocurrency market. The agency has been increasing its scrutiny of this nascent industry over the past year or so, and it seems clear that its focus is on protecting investors and ensuring that companies are complying with all applicable laws.

The SEC’s investigation is still in its early stages, and it remains to be seen what action if any, the agency will take. However, the fact that the SEC is looking into the matter suggests that it takes the issue seriously.

Lawsuit Against Terraform

This is not the first time that UST has been embroiled in controversy. Last month, a group of investors filed a class-action lawsuit against Terraform Labs, alleging that the company had misled them about the risks associated with investing in UST.

The law firm LKB & Partners, representing its employees who lost money in Terra’s collapse in May 2022, announced today that they will be filing suit against Terraform Labs CEO and co-founder Do Kwon. The firm will also be seeking to have Kwon’s property seized in the aftermath of the collapse.

Terra’s algorithmic stablecoin (UST) and LUNA governance token lost almost $40 billion in value last week, leaving many employees of LKB, a law firm that was heavily invested in Terra, out of pocket. The lawsuit seeks to recover those losses and hold Kwon accountable for what the plaintiffs allege is his role in leading them astray.

Kwon has not yet commented publicly on the lawsuit, but he is likely to face an uphill battle convincing a court that he is not liable for the losses suffered by LKB’s employees. Given the size of the loss and the fact that it occurred under Kwon’s watch, it will be difficult for him to avoid at least some measure of responsibility.

South Korean investors are not the only ones who lost money in the collapse of Terraform Labs—there are many other victims from all over the world who are now seeking justice. It remains to be seen how this case will play out, but one thing is for sure: those who were duped by Do Kwon and Larimer will not rest until they get some measure of compensation for their losses.

Given all of this, it’s no surprise that some investors are now calling for greater regulation of UST and other cryptocurrencies. Whether or not such regulation comes to pass remains to be seen, but one thing is certain: the SEC’s investigation into Terraform Labs is likely to add more uncertainty to an already volatile market.

Barinem Pene Verified

Barry Pene is a stern blockchain research/copywriter. Barry has been trading cryptos since 2017 and has been invested in issues that would put the blockchain industry on the right pedestal. Barry's research expertise cuts across blockchain as a disruptive technology, DeFis, NFTs, Web3, and reduction of energy consumption levels of cryptocurrency mining.

Latest News