Unchained DEX in the City: Insider Trading and Crypto: What the Law Actually Says - Ep. 962
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Nov 26, 2025 Insider trading in crypto is murkier than many realize. The hosts break down how blockchain tech aids in detecting this illicit activity. They discuss the challenges of applying traditional insider trading laws to decentralized platforms and how AI might shift market dynamics. Notably, they unpack the SEC's scrutiny of crypto firms and the differences in regulatory expectations between centralized and decentralized exchanges. There's a spirited debate on the future of front-running and how transparency in crypto can both help and hinder compliance efforts.
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Core Definition And Legal Roots
- Insider trading centers on trading with material non-public information (MNPI), but the legal boundaries are messy and formed largely by case law.
- The law aims to prevent duty-based misuse of confidential info, not to punish having an informational edge from research.
Two Legal Theories Explained
- Two main legal theories apply: classical (insiders trading their company's securities) and misappropriation (betrayal of a duty by outsiders).
- Both theories require a duty or trusted relationship, not merely overhearing or accidental knowledge.
Coinbase Listing Tip Led To Guilty Plea
- Jessi described the Wahee/Coinbase case where an employee tipped others about listings and pleaded guilty after crypto sleuths exposed them on chain.
- On-chain investigators and Coinbase's probe led to DOJ involvement and a guilty plea.