The U.S. Securities and Exchange Commission has sent letters to several crypto exchanges asking for information on insider trade protection. The SEC sought to protect investors after Monday’s crypto market crash resulted in the liquidation of more than $ 1 billion, with Bitcoin (BTC) and Ethereum (ETH) diving more than 15% and 17% respectively.
The SEC questions the lack of Insider Trading Protection on Crypto Exchanges
Fox Business Reporter Eleanor Terret announced in a June 14 tweet that the SEC had sent a letter seeking information on the lack of insider trading protections on crypto exchanges. The tweet read:
“Industry sources with knowledge of the matter told me SECGov has sent letters to several crypto exchanges asking about the lack of insider trade protection.
As many insider trading cases emerge in the crypto market, the SEC may be seeking further regulations to protect investors. Previously, the SEC has required crypto exchanges to register and report financial information. SEC chain Gary Gensler has also attacked crypto exchanges for trading against customers. In addition, it changes the definition of “exchange” for the purposes of the Stock Exchange Act.
According to Naeem Aslam, chief market analyst at Avatrade, financial lawmakers have always added restrictions on fiat currency withdrawals amid serious panic in the market. He thinks that the same logic can help gain trust among crypto traders.
Furthermore, the SEC is investigating several crypto companies including Binance ICO crypto exchange from BNB and Terraform Labs and its founder Do Kwon in unlisted securities. In fact, the OpenSea insider trading case could lead the SEC to regulate NFT as a security.
Crypto Markets Under Pressure Amid Selloffs
The crypto market capitalization has dropped below 1 trillion as a result of market crash seen yesterday. The price of Bitcoin (BTC) and Ethereum (ETH) continued to decline on Tuesday, with BTC down to $ 20,950 and ETH to $ 1094, the lowest value in the last 24 hours.
The SEC should seek to protect investors by forcing crypto exchanges to increase investor protection and prevent insider trading.
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