As DATs Spread, Crypto's Opacity Threatens TradFi Stability, Expert Warns

The crypto industry's long-standing issues with information asymmetry and front-running are spilling over into traditional finance through digital asset treasuries (DATs), according to Shane Molidor, founder of Forgd. DATs-companies that accumulate cryptocurrencies to hold as corporate assets-are replicating the structural flaws of token markets, where prices often diverge from fair value due to opaque trading practices and insider behavior. Molidor, a veteran of exchanges like Gemini and AscendEX, warns that these dynamics are now embedded in institutional products, creating new risks for investors and regulators alike.

DATs initially focused on high-liquidity assets like Bitcoin and Ethereum, where price discovery mechanisms are relatively robust. However, as competition intensified, many DATs have shifted toward smaller, less liquid tokens, amplifying vulnerability to manipulation. This shift mirrors the tactics seen in token launches, where exchanges and market makers often underprice assets or thin liquidity to fuel speculative demand. Molidor explains that even minor buy-side activity in illiquid markets can trigger outsized price swings, creating a "virtuous loop" until liquidity dries up. "Everyone thinks they're getting a fair cost basis," he said, "but they're buying all-time highs and catalyzing poor user experiences."

The problem is compounded by the fundraising processes of DATs themselves. During outreach to potential backers, insiders gain early visibility into target tokens, enabling secondary market front-running. Molidor notes that the unspoken goal of some DATs is to generate enough market impact to drive prices upward, fueling fear of missing out among retail investors. This feedback loop, however, is fragile. When buying pressure wanes, the same thin liquidity that drove gains can trigger rapid collapses. A case in point is ALT5 Sigma, a Nasdaq-listed fintech that pivoted to a DAT strategy for World Liberty Financial tokens. The company faced regulatory scrutiny, internal turmoil, and a stock price collapse of 80% after adopting the strategy, with reports of staff warnings about potential litigation and a money laundering conviction in Rwanda.

Parallels to traditional finance are emerging. Recent insider sales at DoorDash and TransDigm Group highlight how prearranged trading plans, often governed by Rule 10b5-1, are increasingly used to exploit market knowledge https://www.coinglass.com/news/757917. While these transactions are legal under current frameworks, they underscore how information advantages-whether in crypto or TradFi-are being weaponized. Molidor contrasts the speculative momentum-driven approaches of Asian exchanges with the more cautious, auction-based listings of Western platforms like Coinbase. "Efficiency matters," he said, "but it doesn't resonate with speculative retail demographics."

Regulatory responses are beginning to catch up. The U.S. Securities and Exchange Commission's 2025 agenda includes streamlined rules for digital asset trading on national exchanges and clearer guidelines for intermediaries, aiming to reduce ambiguity in crypto compliance. Meanwhile, the UK's expanded Cryptoasset Reporting Framework (CARF) mandates domestic transaction reporting from 2026, while Turkmenistan has legalized crypto under strict state control. These moves reflect a global push to integrate digital assets into formal financial systems, though Molidor argues that alignment between blockchain founders and institutions remains elusive.

The next phase of market evolution will test whether participants can move beyond speculative models. "You're giving exposure to something many investors don't understand," Molidor said. When prices reconverge with fair value, the lack of transparency in DATs and token markets could lead to significant investor losses. The challenge, he added, lies in bridging the gap between crypto's technical innovation and its capital market mechanics. "Founders don't know how to operate within financial systems, and institutions don't understand how crypto markets function," he concluded.