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SEC Probes US-based Crypto Exchanges for Insider Trading

The US Securities and Exchange Commission (SEC) is investigating possible insider trading on US-based crypto exchanges. Fox Business journalist Eleanor Terrett revealed, citing industry sources conversant with the matter.

Per Terrett, the securities regulator has sent several crypto exchanges letters asking about their lack of insider trading safeguards. Terrett’s sources did not reveal the names of the exchanges the SEC is investigating.

This investigation marks the regulator’s latest move to regulate the crypto space. Previously, the SEC asked crypto exchanges to register and report financial information.

Meanwhile, Gary Gensler, the SEC’s Chair, continues calling for stricter crypto regulation, citing inadequate consumer protections.

In a recent interview with Bloomberg, Gensler said,

Crypto’s got a lot of those challenges– of platforms trading ahead of their customers. In fact, they’re trading against their customers often because they’re market-marking against their customers.

Apart from insider trading, the SEC said it was investigating Binance and its native token, Binance Coin (BNB). Specifically, the SEC seeks to determine whether Binance violated securities laws in its 2017 initial coin offering (ICO). Terraform Labs and its founder, Do Kwon, are facing a similar probe from the regulator. 

Recent Crypto Selloff Spooks Regulators

The SEC’s move to investigate crypto exchanges comes after the crypto market crashed yesterday. As a result, the crypto market’s capitalization plunged below $1 trillion for the first time in more than a year. At the time of writing, the crypto market cap stands at $939.39 billion.

Bitcoin (BTC), the largest crypto by capitalization, is down 4.36% in the day to trade at $22,203.41. According to data from CoinMarketCap, BTC traded as low as $21,033.82 earlier today.

Meanwhile, Ethereum (ETH) has lost 0.49% over the past 24 hours to change hands at $1,198.70. The largest altcoin traded as low as $1,096.24 today morning. This is the lowest point ETH has hit in more than 18 months.

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Like BTC and ETH, most altcoins have also plunged to their lowest levels in more than a year. Yesterday’s slump came after crypto lending platform Celsius paused withdrawals due to liquidity problems.

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