Insider trading is an SEC country club looking for a scapegoat
The author argues that insider trading is a pervasive human greed issue, not unique to crypto, requiring modernized regulations and faster enforcement.Summary
The recent massive crypto liquidation event, triggered by Trump's tariff announcement, exposed significant vulnerability to insider trading, exemplified by a large short position taken just before the drop. The author contends that insider trading is an age-old problem rooted in human greed, not just a flaw of blockchain technology; in fact, blockchain's transparency is exposing these issues.
Traditional financial markets, including the global financial crisis actors, have historically seen little punishment for insider dealing due to outdated laws, such as the US Securities Exchange Act of 1934 and Rule 10b5-1, which has created loopholes. The SEC's slow enforcement, highlighted by the eight-year conviction in the 'shadow trading' case of SEC v. Panuwat, is insufficient for modern markets.
The solution requires upgrading laws to explicitly cover modern instruments like derivatives and digital assets, redefining insider information to include government channels, and strengthening cooling-off periods. Enforcement must be significantly faster, and regulators must apply these modernized rules equally across traditional and digital asset markets, rather than scapegoating crypto alone.
(Source：Cointelegraph)