SEC Probes Crypto Treasury Leaks, Insider Trading Risks

The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have launched a preliminary inquiry into corporate announcements regarding digital asset treasury strategies. According to a Wall Street Journal report citing people familiar with the matter, the outreach was based on a review of more than 200 firms that disclosed plans to hold cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) on their balance sheets this year. However, regulators flagged only a portion of these companies for further scrutiny. The investigation was triggered by the identification of unusual trading activity—specifically, sharp price swings and heavy trading volumes—in the days preceding the public disclosure of these crypto treasury plans.

This corporate strategy, popularized by Michael Saylor’s firm, MicroStrategy, involves companies raising debt or equity to acquire digital assets as balance-sheet reserves. While intended to project innovation and financial strength, the timing and execution of these announcements have drawn regulatory suspicion. The core question being examined is whether selective leaks occurred or whether individuals traded on material non-public information (MNPI) before the strategies were made public, potentially violating securities laws.

At the heart of the investigation is Regulation Fair Disclosure (Reg FD), an SEC rule adopted in 2000. Andrew Rossow, a public affairs attorney and CEO of AR Media Consulting, explained to Decrypt that Reg FD was created “to ensure that all investors have equal access to ‘material’ corporate information at the same time.” The rule prohibits companies from selectively disclosing material information—defined as anything a reasonable investor would consider important—to certain individuals or groups before making it public. Violations can lead to civil penalties, enforcement actions, and severe reputational damage.

Rossow clarified that for a Reg FD violation to be established, the material non-public information must be “traced directly to a tipper or company source, or an agent who acts on that information.” He contrasted this with mere industry gossip or speculation, which generally falls outside the rule’s scope. Furthermore, if the recipient of such information trades on it or leaks it for personal or market gain, they could face insider trading liability. This dual-layer of legal risk makes the current probe particularly serious for the involved firms and individuals.

Investigations into potential information leaks typically begin with the identification of anomalous market activity, such as the unusual trading patterns observed before the crypto treasury announcements. According to Rossow, “the smoking gun is a direct trace back to the source/tipper.” To build this crucial link, authorities from the SEC and FINRA meticulously examine a wide array of communications. This digital trail can include emails, meeting notes, messages on internal platforms like Slack or Microsoft Teams, text messages, calendar invites, and device records.

The goal is to find concrete evidence connecting the suspicious trades to a specific individual within the company who had advance knowledge of the impending crypto treasury disclosure. This forensic process is complex and requires demonstrating that the trader acted based on confidential information, not independent analysis or market rumor. The outcome of these investigations will likely set a significant precedent for how corporate disclosures in the rapidly evolving digital asset space are regulated and monitored in the United States.

Beyond the immediate legal implications, this regulatory probe casts a shadow over the crypto treasury trend itself. Financial observers have previously warned that while a carefully structured strategy can signal confidence, poorly timed or seemingly opportunistic moves risk appearing gimmicky. More tangibly, they can expose firms to market volatility, forced liquidations, and financial instability if the value of their digital asset reserves plummets.

The SEC and FINRA’s scrutiny introduces a new layer of risk: regulatory and compliance exposure. Companies considering following in the footsteps of MicroStrategy must now navigate not only market risks but also the heightened danger of inadvertently violating disclosure rules. As the investigation unfolds, it serves as a stark reminder that in the eyes of U.S. regulators, innovation in corporate finance does not exempt companies from the fundamental principles of fair and equal information disclosure.