SEC, FINRA investigates suspicious transactions ahead of cryptocurrency announcement

The SEC and FINRA have begun investigating suspicious trading activities, and then the public trading company announced plans to acquire cryptocurrencies.

Regulators believe that some investors may have profited from prior undisclosed knowledge of these cryptocurrency announcements, which may violate fair disclosure rules.

Possible violation of fair disclosure rules

The survey highlights publicly traded Digital Assets Finance (DAT) company, which announced plans to acquire capital and purchase cryptocurrencies. More than 200 DATs have been made public this year, some of whom are currently in contact with regulators.

Regulators have identified “suspicious trading patterns” that include high peaks in trade volumes and sudden price increases in days or hours when companies announce cryptocurrency plans. These actions suggest that at least some investors may make profits by trading internal information.

SEC officials have warned several companies about potential regulatory fair disclosure (REG FD) violations, a provision that requires extensive disclosure of materials, non-public information, rather than selective disclosure. The financial regulator is concerned that some people buy upcoming cryptocurrencies and make profits by selling the company’s shares before the press release.

Experts agree that these violations put market value at risk and put companies under legal impact and reputational consequences. Even in the larger non-Criputo financial markets, the institution has never had such reservations about REG FD violations. Therefore, this level of scrutiny increases the possibility that cryptocurrency companies face more stringent restrictions in the near future.

Company Encryption Blooming under Microscope

The survey is conducted in the context of increasing adoption of cryptocurrencies by businesses. Early promoters have helped the digital asset treasury attract more than $20 billion in venture capital this year, with more than $100 billion pledged to buy cryptocurrency purchase plans.

Now, the listed company holds more than 1 million BTC worth $113 billion and ETH worth $200.6 billion. The monthly DAT pay raise reached $6.2 billion in July, the highest monthly total ever.

Now, regulators face challenges to ensure this growth trend and will not open up new avenues for insider trading and selective disclosure.

Advocates believe that the investments in the treasury show confidence in the long-term value of cryptocurrencies. However, there are still concerns about how quickly companies disclose market information and raise funds, which can encourage selective disclosure, leaks and manipulation of sexual transactions.

The SEC and FINRA said the cryptocurrency boom must operate in existing securities laws and actively oppose suspicious models. If misconduct is found, enforcement actions may be taken to set a precedent for future regulation of company digital assets.