Regulators Target Crypto-Treasury Firms Over Pre-Announcement Stock Surges

The U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) have launched an investigation into unusual trading patterns observed in the shares of companies adopting "crypto-treasury" strategies, where firms raise capital to purchase cryptocurrencies. Over 200 companies announced such plans in 2025 alone, with regulators flagging sharp stock price surges days before public disclosures as potential indicators of insider leaks or selective information dissemination title1^[1]. The probe centers on whether these pre-announcement gains violated Regulation Fair Disclosure (Reg FD), which mandates equal access to material information for all investors title3^[2].

Regulators have sent letters to more than 200 firms, initiating what could evolve into formal investigations. The focus is on whether insiders or connected parties traded on nonpublic information regarding corporate crypto purchases, which are often volatile assets. For instance, Trump Media and Technology Group’s stock surged significantly before its $2.5 billion Bitcoin treasury plan was disclosed, while GameStop’s shares rose 40% prior to announcing a $500 million Bitcoin buy title2^[3]. Such patterns have raised concerns about market fairness and the integrity of disclosure practices in the crypto-treasury space.

The scrutiny extends to whether companies adhered to Reg FD by avoiding selective disclosures. The rule prohibits firms from sharing material nonpublic information with a subset of investors, a practice that could distort market dynamics. Analysts note that while crypto-treasury strategies aim to hedge against inflation and attract younger investors, the associated price volatility and pre-announcement trading anomalies risk eroding trust in capital markets title3^[4]. FINRA’s letters, a common precursor to enforcement actions, signal regulators’ intent to address potential violations, with possible penalties including fines or trading restrictions.

The investigation highlights broader challenges in regulating crypto-treasury strategies, which blend traditional securities markets with the inherent volatility of digital assets. Regulators emphasize the need to balance innovation with investor protection, particularly as firms increasingly use debt or equity to fund crypto acquisitions. The SEC and FINRA have warned that missteps in oversight could undermine confidence in both crypto and traditional markets, given the complexity of valuing and custodying digital assets title1^[5].

Companies under scrutiny may face delays in announcing crypto-treasury plans to avoid regulatory backlash or implement stricter internal controls to ensure compliance. The outcome of the probe could reshape how firms execute such strategies, with potential implications for market transparency and corporate governance. For now, the SEC and FINRA remain focused on tracing communications and trading activity to determine if material nonpublic information was misused, a process that could set precedents for future crypto-related enforcement title3^[6].