- Regulators probe unusual stock spikes before crypto purchases revealed publicly.
- SEC and FINRA target suspicious trading before crypto treasury announcements.
- Companies face scrutiny over stock manipulation ahead of crypto news.
U.S. regulators are investigating unusual trading patterns that occurred just before digital asset treasury companies (DATs) publicly revealed their plans to acquire cryptocurrency.
According to sources familiar with the matter, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are scrutinizing several firms in the space due to concerning stock market activity.
Focus on Unusual Trading Behavior
Regulators are particularly focused on significant spikes in stock prices and trading volumes that took place shortly before public announcements regarding crypto purchases. These trading activities have raised eyebrows and fears that confident investors might have access to non-public information, and hence they will rake in before the announcement.
Such market manipulation is an infringement of the Regulation Fair Disclosure as it subjects companies to the responsibility of disclosing material information to the populace in a fair and equal way to ensure that no one has an undue advantage.
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The SEC and FINRA have already contacted the companies working in this new trend in digital assets and told them that they must adhere to regulations and avoid selective disclosure. This has been cautioned by the SEC, which speculates on the legal implications of such information disclosure to a select few analysts or investors before it is shared with the general population.
If these acts are established, they could impact the integrity of the market and result in the imposition of enforcement measures.
Surge in Corporate Interest in Crypto Treasury Strategies
The investigation comes as the trend of companies integrating cryptocurrency into their corporate treasuries continues to rise.
Since other companies have followed the lead of companies such as MicroStrategy, which invested billions of dollars in Bitcoin, there is a common trend of businesses turning to crypto as a means of diversifying their financial approach.
This has created a lot of interest in the market, though it has also attracted the attention of regulators, who are keen on making sure that the fast growth does not create unfair practices in the market.
As crypto treasuries strategies gain wider acceptance, the SEC and FINRA tend to monitor companies operating in the field more closely. As the digital asset industry continues to expand, regulatory scrutiny will only intensify to protect investors and maintain a level playing field in the market.
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