The US market watchdogs are currently conducting investigations into various Digital Asset Treasury Companies due to suspicious trading activities linked to their cryptocurrency acquisition plans. According to a report by the Wall Street Journal (WSJ), the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are looking into potential cases where these companies or individuals associated with them may have benefited from insider trading.
Venture capitalist Mike Dudas has described the situation as “a brewing bloodbath,” emphasizing the importance of enforcing regulations to improve trust and transparency in the digital markets. The investigators suspect that some investors may have used nonpublic information to make trades before major crypto-related announcements, enabling them to make quick profits once the news was made public.
While the specific companies under review have not been disclosed, regulators are focusing on abnormal trading volumes and sudden price spikes that occurred just before official statements about corporate crypto purchases. These patterns suggest that insiders or individuals with access to privileged information may have been exploiting the market.
In response to these findings, the SEC and FINRA have reminded companies of their obligation to disclose significant decisions uniformly to all stakeholders. Selective communication or delayed information dissemination to investors and analysts could be deemed as market manipulation, and firms must ensure that everyone has equal access to crucial details simultaneously.
The increased scrutiny on Digital Asset Treasury Companies reflects a broader effort to protect investors as more corporations embrace digital assets. In the past year, an increasing number of companies have added cryptocurrencies to their balance sheets to diversify their portfolios and gain exposure to blockchain-related returns.
Data from Bitcoin Treasuries reveals that 194 public companies now hold over 1 million BTC, valued at approximately $113 billion. Additionally, StrategicETHReserve reports that 69 organizations possess 5.26 million ETH worth around $20.6 billion. Even Solana, typically popular among retail users, has seen significant corporate adoption, with nine entities collectively holding over 13.4 million SOL, equivalent to about $2.6 billion in value.
As the adoption of digital assets continues to grow, regulatory bodies are keen on ensuring fair and transparent practices within the market. By investigating suspicious trading activities and enforcing regulations, the SEC and FINRA aim to protect investors and maintain the integrity of the digital asset industry.