The U.S. Securities and Exchange Commission (SEC) has launched an investigation to determine whether crypto exchanges have proper safeguards against insider trading.
The information has been revealed by a source with direct knowledge of the inquiry.
The source claims that the SEC has sent a letter to at least a major crypto exchange. The letter asks for information about how the platform protects users from insider trading facilitated through its network.
The source believes that other exchanges might also be involved in the inquiry.
The letter was sent following the collapse of the Terra(USD) stablecoin and a consequent loss of $40 billion dollars of investor wealth.
It is unclear whether insider trading rules apply to crypto. However, SEC chair Gary Gensler is not waiting for the clarification.
He has previously said that he’s concerned that crypto exchanges aren’t putting up proper walls between different parts of their businesses (i.e. market-making and trading services) like traditional exchanges are required to.
The SEC chair has time and again emphasised the importance of regulation of the crypto industry.
