The SEC has reportedly launched a probe to discover how crypto exchanges are working to prevent insider trading.
A person with direct information of the SEC’s activities said that the commission had sent a letter to a major crypto exchange requesting information about how the platform protects users from insider trading. The source believes the same letter has been sent to multiple exchanges.
It is unclear which exchange or exchanges have received the request, but the news outlet said Coinbase, Binance, FTX, and Crypto.com all declined to comment. The SEC also declined to confirm the probe.
The nature of the inquiry is also unclear. The SEC could be seeking out leads to litigate against an exchange’s potential legal violations via the enforcement division, or it could be a routine compliance check through the Office of Compliance Inspection and Examinations.
Allegations of insider trading at the NFT marketplace OpenSea have caught the attention of the SEC in recent weeks. The commission could ultimately label NFTs as securities after charges of insider trading to OpenSea’s former product manager Nathanial Chastain surfaced.
More recently, the decentralized finance staking and lending platform Celsius has come under fire for freezing user withdrawals as rumors swirl around its potential insolvency amid huge transfers of crypto into FTX exchange.
