Regulators Target Crypto-Treasury Spikes to Safeguard Market Fairness

The U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) are scrutinizing unusual stock price movements preceding corporate announcements of cryptocurrency treasury strategies, signaling heightened regulatory attention to potential insider trading and selective disclosure violations. Over 200 publicly traded companies have adopted crypto-treasury models in 2025, raising capital to purchase digital assets, with regulators flagging sharp price surges in the days before these disclosures. The trend, inspired by MicroStrategy’s Bitcoin accumulation, has seen firms across industries—software, gaming, biotech, and energy—allocate portions of their balance sheets to crypto, targeting over $20 billion in fundraising.

Regulators are examining whether companies selectively shared nonpublic information with investors or analysts prior to announcements, violating Regulation Fair Disclosure (Reg FD). This rule prohibits material, nonpublic information from being disclosed to a subset of investors before public release. The Wall Street Journal reported that the SEC and FINRA have sent inquiry letters to firms, warning of potential breaches. For instance, Trump Media and Technology Group’s shares surged 433% intraday in May 2025 ahead of its $2.5 billion Bitcoin treasury announcement, while GameStop’s stock rose 40% before disclosing a $500 million Bitcoin buy. Biotech firm MEI Pharma also faced scrutiny after its stock nearly doubled in four days before announcing a Litecoin allocation.

The investigations focus on pre-announcement trading patterns that suggest insider knowledge. In some cases, companies’ stock prices doubled or tripled before public disclosures, raising concerns about leaks. FINRA’s role includes reviewing broker communications, while the SEC is examining clustered buy orders tied to company vendors. Regulators emphasize that such practices could erode investor trust and distort market fairness, particularly in volatile crypto contexts.

The crypto-treasury strategy has faced growing skepticism as market values for some firms have fallen below their crypto holdings, signaling investor doubts about long-term viability. Companies like SharpLink Gaming, which shifted to an Ethereum treasury strategy, have since initiated debt-funded buybacks to counter declining stock prices. Regulators’ actions may compel firms to adopt stricter internal controls and delay announcements to avoid scrutiny, potentially slowing the trend’s momentum.

While no enforcement actions have been confirmed, the mere investigation could alter corporate strategies and investor behavior. Analysts note that the SEC and FINRA’s focus on pre-announcement volatility underscores the challenges of balancing innovation with regulatory compliance in the crypto space.

Source: [1] (https://finance.yahoo.com/news/us-regulators-probe-stock-moves-003856926.html) [2] (https://cryptonews.com/news/crypto-treasury-moves-draw-us-regulator-scrutiny/) [3] (https://www.financemagnates.com/trending/stocks-jump-before-crypto-treasury-moves-regulators-raise-red-flags/)