SEC Targets Firms Boosting Crypto Holdings
Twenty-four listed companies have announced plans to raise more than $133 billion for crypto purchases, with 94 of them listed on Nasdaq.
Quick overview
- U.S. regulators are investigating potential insider trading linked to corporate announcements of cryptocurrency purchases.
- The SEC and FINRA are focusing on companies that announced plans to invest in cryptocurrencies after detecting unusual trading activity.
- Nasdaq has tightened its requirements for companies raising funds for cryptocurrency acquisitions amid rising corporate interest.
- Legal experts suggest that regulatory inquiries often precede deeper investigations into insider trading practices.
U.S. regulators are investigating potential information leaks and insider trading tied to corporate announcements of cryptocurrency purchases. Nasdaq, meanwhile, has tightened requirements for companies seeking to raise funds for such acquisitions.
According to The Wall Street Journal, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have zeroed in on companies that revealed plans to allocate part of their balance sheets to cryptocurrencies, after detecting unusual trading activity in their shares ahead of the announcements.
The scrutiny comes after more than 200 firms followed the strategy popularized by Michael Saylor’s MicroStrategy—the largest institutional holder of bitcoin—by issuing debt or raising capital to purchase bitcoin (BTC), ethereum (ETH), solana (SOL), and other digital assets.
Concerns Over Potential Leaks
Regulators’ inquiries reportedly focused on sharp trading volumes and price increases observed before official announcements, raising suspicions of insider trading. Sources cited by the Journal said the SEC has warned about possible violations of Regulation Fair Disclosure (Reg FD), which prohibits sharing material nonpublic information with select investors or analysts.
Legal experts note that such outreach is often the first step in deeper investigations. “When these letters go out, they shake the hive—it’s usually the start of an insider-trading case,” one attorney said.
The regulatory spotlight comes as corporate interest in cryptocurrencies continues to rise. Twenty-four U.S.-listed companies have announced plans to raise more than $133 billion for crypto purchases, with 94 of them listed on Nasdaq, which in early September tightened its rules for such share issuances.
While MicroStrategy’s strategy boosted its stock price by over 2,000% since 2020, analysts warn that the positive effects on share performance have diminished. Currently, 161 companies hold more than one bitcoin, collectively owning about 989,926 BTC—or 4.7% of total supply—according to CoinTelegraph data.
Even Saylor himself recently acknowledged that growing institutional adoption could make the market less appealing to retail traders. “You want volatility to decline so mega-institutions feel comfortable taking large positions. But if volatility drops, the market could get boring for a while,” he said in an interview.
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