Insider Trading Suspicions Mount As Crypto Treasuries Balloon – Report

Companies that buy crypto are seeing big stock moves — and some of those moves happened before the news. A report by Fortune has disclosed that several firms which announced large purchases of cryptocurrency also saw sharp stock gains in the days just before their public ￰0￱ timing has raised red flags for traders, regulators and investors who say those price jumps look like classic front-running — trading on material non-public ￰1￱ Preannouncement Jumps According to the report, MEI Pharma’s stock nearly doubled just before it revealed a $100 million purchase of Litecoin. SharpLink’s shares rose from $3 to $6 in the three trading days before announcing it would add $425 million in Ethereum to its balance ￰2￱ City Ventures’ stock more than tripled in the two days before it announced a crypto-related ￰3￱ new SEC filings, press releases or social chatter were linked to those ￰4￱ the pattern is hard to ￰5￱ Crypto, Roadshows & Information Leakage Based on the report, a common thread appears to be the roadshow — the private meetings where companies pitch deals to selected investors before an ￰6￱ can put many people in a position to hear sensitive ￰7￱ those meetings line up with suspicious stock pops, researchers and executives say information leakage is the likely ￰8￱ analysts have likened the behavior to the same sort of insider trading that often shows up around takeover ￰9￱ academic study even found that many illegal insider trading cases are tied to takeover news that leaks before it is made ￰10￱ The Law Says US law bans trading on material non-public ￰11￱ ban covers company insiders and anyone else who was “wall-crossed” — that is, given confidential details under the condition they keep it ￰12￱ who traded on the tip is not always easy, and identifying the specific source of a leak can be ￰13￱ sharp, unexplained price moves right before an announcement often line up with behavior regulators ￰14￱ Try New Steps Some firms are taking steps to tighten the window when information might ￰15￱ Industries and Verb Technology have changed roadshow ￰16￱ of giving out a ticker right away, they wait until after market close on a Friday and then make the public announcement on ￰17￱ shortens the time anyone has to trade on inside ￰18￱ is a practical fix, even if it cannot stop all ￰19￱ Investors Should Watch Short-term spikes without public news deserve ￰20￱ moves that line up with later big corporate actions can mean insiders had a ￰21￱ traders who jump into these stocks risk being burned if the market corrects after the announcement or if regulators later ￰22￱ and clearer controls on preannouncement briefings are being called for by market watchers who want a fairer playing ￰23￱ image from Getty Images, chart from TradingView