The US Securities and Exchange Commission has sent letters to several cryptocurrency exchanges requesting details about security measures against insider trading. The SEC is looking to protect investors after Monday’s crypto market crash led to more than $1 billion in liquidations, with Bitcoin (BTC) and Ethereum (ETH) down more than 15% and 17%, respectively.
SEC Questions Lack of Insider Trading Protections on Cryptocurrency Exchanges
Fox Business journalist Eleanor Terrett announced in a tweet on June 14 that the SEC sent letters seeking information about the lack of insider trading protections on crypto exchanges. The tweet says:
“Industry sources with knowledge on the subject tell me the SECGov has sent letters to various crypto exchanges inquiring about the lack of safeguards against insider trading.”
As many cases of insider trading have surfaced in the crypto market, the SEC might be seeking more regulations to protect investors. Previously, the SEC had required cryptocurrency exchanges to record and report financial information. SEC chain Gary Gensler had also attacked crypto exchanges for trading with clients. In addition, he modifies the definition of “exchange” for the purposes of the Securities Market Law.
According to Naeem Aslam, Chief Market Analyst at Avatrade, financial lawmakers have always added restrictions on the withdrawal of fiat currency during a serious market panic. He thinks the same logic could help restore trust among crypto traders.
In addition, the SEC is investigating several crypto companies, including Binance BNB and Terraform Labs crypto exchange ICO and its founder make kwon on unrecorded securities. In fact, the OpenSea insider use case could see the SEC regulate NFTs as securities.
Crypto Market Under Pressure Amid Mass Selloffs
The crypto market capitalization has fallen below 1 trillion as a result of the market crash seen yesterday. Bitcoin (BTC) and Ethereum (ETH) prices continue to slide on Tuesday, with BTC falling to $20,950 and ETH to $1094, the lowest value in the last 24 hours.
The SEC should seek to safeguard investors by forcing crypto exchanges to enhance investor protection and prevent insider trading.
The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication bears no responsibility for your personal financial loss.