200+ Corporate Crypto Treasury Firms Under Probe from SEC, FINRA

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The U.S. regulators are now zeroing in on corporate crypto treasuries. 

The SEC and FINRA are investigating more than 200 companies that hold cryptocurrency in their reserves after unusual stock activity raised red flags about potential insider trading, according to the Wall Street Journal.

Here’s why this matters. 

Suspicious Stock Moves

The probe comes after regulators noticed sharp stock price jumps and unusually high trading volumes before firms announced major crypto purchases. This pattern hints that some investors might have had access to confidential information, which is a clear violation of the Fair Disclosure Rule (Reg FD), which bans selective sharing of market-moving data.

No companies have been publicly named, but officials warned that selective communication or delayed updates to shareholders could qualify as market manipulation.

The Corporate Crypto Rush

Corporate crypto treasuries are booming. 194 public companies now hold over 1 million BTC, worth more than $110 billion, roughly 4.6% of Bitcoin’s total supply. Michael Saylor’s Strategy leads the pack with 639,835 BTC (~$70B), followed by Marathon Digital and Twenty One Capital.

Companies are rushing to follow Strategy’s ‘strategy’, seeing digital assets as a balance-sheet hedge and hoping to replicate its gains since 2020. But with big rewards come big risks.

Early Trading Sparks Concerns

People are pointing out signs of what could be insider trading. SharpLink Gaming’s stock jumped five days before a $425M Ethereum treasury announcement. MEI Pharma’s shares nearly doubled four days before a Litecoin purchase disclosure. Other firms – Mill City Ventures, Kindly MD, Empery Digital – showed similar pre-announcement spikes.

Venture capitalist Mike Dudas called it “a brewing bloodbath,” noting that SEC action is needed to restore trust in the sector.

How the Treasury Flywheel Works

Corporate crypto treasuries often rely on the mNAV mechanism – market value relative to net asset value. When mNAV is high, companies can raise funds and buy more crypto. This creates a positive feedback loop: higher stock price → more funding → more crypto → stronger market confidence → higher stock price.

MicroStrategy has used this system successfully, but it’s fragile. If mNAV falls below 1, the loop can reverse sharply, triggering sell-offs and wiping out confidence.

Regulators are increasing scrutiny, raising issuance thresholds, and limiting opportunities for manipulation.