SEC Reportedly Begin Inquiry Into Insider Trading At Crypto Exchanges

The U.S. Securities and Exchange Commission has approached at least one major crypto exchange with a letter asking about its safeguards, according to Fox News report.

The U.S. Securities and Exchange Commission (SEC) has launched an investigation into whether crypto exchanges have sufficient protections against insider trading, according to Fox News, which cited a source with direct knowledge of the inquiry.

The source said the SEC had sent a letter to a major crypto exchange asking about the kinds of protections it has in place against insider trading. The inquiry is meant to cover additional exchanges as well, according to the source.

The letter was sent following last month’s collapse of Terra’s UST stablecoin and governance token LUNA, when around $40 billion of investor wealth was wiped out.

It’s not clear, if other letters have been issued, but the person with direct knowledge said based on conversation with industry insiders the investigation is wide-ranging.

The SEC, and major crypto exchanges such as Binance and Coinbase have not respond to a request for comment on the Fox News report.

The SEC is also reportedly looking into whether Terraform Labs, the company behind UST and LUNA, violated U.S. laws in its marketing of the cryptocurrencies.