Hegic’s Profitable DeFi Strategy Raises Concerns
Hegic, a crypto derivatives trading platform, is facing the possibility of an insider trading investigation by the U.S. government. The platform recently made $17 million after its founder announced the closure of Whiteheart, Hegic’s sister platform. This announcement caused a surge in demand for Whiteheart’s token, WHITE, resulting in a significant price increase.
However, it has come to light that Hegic purchased a substantial portion of WHITE tokens just days before the closure announcement. In combination with an earlier purchase, Hegic now holds around half of Whiteheart’s treasury, valued at $17 million worth of Ether.
Is This Insider Trading?
The rules regarding insider trading in traditional securities markets do not formally apply to cryptocurrencies yet. However, Gary Gensler, the chairman of the SEC, considers most crypto assets as falling under securities regulations.
Legal experts suggest that DeFi founders like Hegic’s Molly Wintermute could argue that they have no fiduciary responsibility to their shareholders. However, Wintermute’s role as the core developer and controller of both platforms undermines this defense.
Hot Take: SEC Investigation Looms Over Hegic
Hegic’s questionable trade with its affiliate company has raised concerns about potential insider trading. While the rules around insider trading in cryptocurrencies are still unclear, SEC Chairman Gary Gensler may view this case as falling under securities regulations. As Hegic holds a significant portion of Whiteheart’s treasury, valued at $17 million worth of Ether, there is a possibility of an enforcement case from the SEC. The outcome of this situation will shed light on how regulators address insider trading in the crypto industry.
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