SEC Launches Investigation into Insider Trading on Cryptocurrency Exchanges

The investigation follows the collapse of the Terra LUNA token, in which investors lost around $40 billion when its peg to the US dollar was broken.

The US stock market watchdog has launched an investigation into whether cryptocurrency exchanges were doing enough to curb insider trading on their platforms, Fox Business reported.

The Securities and Exchange Commission (SEC) sent an official communication to at least one cryptocurrency exchange seeking information on the processes it followed to protect users from bad practices such as insider trading, the report said, citing an unnamed source with knowledge of the investigation.

It was one of the victims of a crypto crash that reduced the value of the global crypto market to less than $900 billion this month from an all-time high of $3.1 trillion in November 2021. Fox Business described the Democratic Republic of Congo investigation into crypto exchanges as “wide-ranging.” It was not yet clear whether other crypto exchanges had received any communication from the SEC.

The SEC’s decision to launch an investigation into crypto exchanges follows the collapse of the Terra LUNA token, in which investors lost around $40 billion when its peg to the US dollar was broken.

SEC Chairman Gary Gensler, in a speech at an industry event last Tuesday, warned investors against schemes offered by lending platforms that seemed too good to be true. We’ve seen again that lending platforms work a bit like banks. They tell investors, ‘Give us your crypto. We’ll give you a great 7% or 4.5% return.

How does someone offer (such returns) in the market today and not give much information, Gensler said. He added: I warn the public. If it seems too good to be true, it may be too good to be true.

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