SEC Scrutinizes Crypto Treasury Stocks for Insider Trading, Challenging Strategy’s Buy-and-Hold Crypto Model

TradingKey - As more public companies adopt cryptocurrency treasury strategies and regulatory scrutiny intensifies, the "crypto treasury" model led by MicroStrategy (MSTR) faces rising challenges from homogenization and market-distorting stock volatility. Amid a broader crypto market pullback, U.S. regulators SEC and FINRA have launched preliminary reviews into some of these firms.

According to an exclusive report by The Wall Street Journal, financial regulators have begun examining whether abnormal trading patterns exist in the stocks of companies that have adopted crypto purchases as a core corporate strategy.

Sources said the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have reached out to a portion of the over 200 public companies that announced crypto treasury plans this year.

According to CoinGecko, among publicly traded companies globally pursuing Bitcoin-based treasury strategies, the top five holders include four U.S.-listed firms, with MicroStrategy and MARA Holdings leading the pack. In the top ten Ethereum treasury firms, nine are U.S.-listed, with BitMine, Sharplink, and Coinbase ranking first.

It’s evident that most companies adopting this strategy experience sharp stock surges immediately after announcing their crypto purchase plans. What has caught regulators’ attention is that some firms saw unusually high trading volume and price spikes in the days before their official announcements. The agencies have expressed concerns about this pattern in recent communications.

The report noted that SEC officials have warned some companies their actions could violate Regulation Fair Disclosure (Reg FD), which prohibits public companies from selectively disclosing material non-public information to investors, analysts, or other market participants who might trade on it.

Legal experts say that when FINRA sends such letters, it often signals the beginning of a deeper investigation into potential insider trading. It remains unclear whether enforcement actions against any companies or individuals are underway.

Being targeted by U.S. regulators is rarely positive news — especially amid a recent broader downturn in crypto markets. On Thursday, September 25, Bitcoin dropped below $110,000, while major altcoins like ETH, BNB, and SOL fell over 6% in a single day. On the same day, crypto treasury stocks tumbled: MicroStrategy down 7%, BitMine down ~5%.

With increasing participation, the crypto treasury space has become more crowded and homogeneous, with most firms simply buying digital assets without differentiated business models.

A recent Coinbase report highlighted that crypto treasury companies now face significant challenges: the scarcity premium enjoyed by early adopters has largely disappeared. These firms are entering a “player-versus-player” era, competing fiercely for investor capital.

Interestingly, following the “buying frenzy,” many companies are now launching “buyback races.” For example, ETHZilla raised $80 million to support a $250 million share repurchase program, aiming to stabilize its stock price after sharp rallies and subsequent crashes.