July 21, 2022
Today, a federal district court will begin to consider the application of insider trading jurisprudence to digital assets or, more specifically, cryptocurrencies.
While conversations regarding the regulation of this emerging and novel asset class may invite lively (and in some instances passionate) debate, there is one issue about which crypto enthusiasts and skeptics may agree—fraud, misrepresentation, and deception or lying, cheating, and stealing—are not be permitted. Our commitment to enforcing against such conduct rises to singular and critical importance when fraudsters intentionally target vulnerable retail market investors. Existing laws and regulations expressly prohibit such misconduct in our markets for good reason. Financial market regulators and law enforcement stand united, prepared to enforce against such predatory and abusive behavior.
Simply stated, certain values and principles are deeply embedded in the statutes, regulations, and jurisprudence that govern our markets. These values and principles aim to protect market participants, including retail customers with limited resources (particularly those who may face fragile financial circumstances), and preserve the integrity of our preeminent financial markets.
Insider trading jurisprudence has engendered many celebrated legal decisions that enhance enforcement against insider trading—Chiarella v. United States; Dirks v. SEC; United States v. O’Hagan. We must continue to work collaboratively to adopt a whole-of-government approach to prevent bad actors from taking advantage of important policy and regulatory debates and to ensure the protection of retail investors and preservation of the safety and soundness of our financial system.