Listed companies' encryption asset allocation reveals suspicions of insider trading! MEI Pharma invested $100 million to buy LTC before the stock price fluctuated, with 184 companies' k billion funds getting on board triggering regulatory alarms.

Several listed companies experienced abnormal stock price rises before announcing large-scale Crypto Assets purchase plans. MEI Pharma’s stock price surged 133% before disclosing a $100 million Litecoin purchase plan, and companies like SharpLink exhibited the same pattern. So far this year, 184 listed companies have cumulatively purchased $132 billion in Crypto Assets, and regulators may investigate potential insider trading.

[Abnormal Trading Patterns in the Wave of Corporate Crypto Purchases]

Biopharmaceutical company MEI Pharma announced in mid-July that it would allocate $100 million in cash reserves to Litecoin, causing its stock price to soar from $3 to nearly $7. What is unusual is that the stock experienced a significant rise several trading days before the announcement, without any SEC filings, press releases, or social media discussions. The same pattern has been observed in several small-cap companies, where stock price fluctuations occurred before the announcement of corporate treasury Crypto Assets allocation plans, raising market concerns about insider trading.

The wave of corporate crypto asset allocation triggered by Michael Saylor

The current trend of corporate Crypto Assets allocation can be traced back to billionaire Michael Saylor. In 2020, his software company MicroStrategy (now renamed Strategy) was the first to announce that it would use Bitcoin as a reserve asset, leading investors to view its stock as an alternative investment for Bitcoin prices. Cheap hotel operators in Japan and others followed suit by starting to purchase Bitcoin in 2024, creating a demonstration effect. According to data from the crypto merger advisory firm Architect Partners, 184 publicly listed companies have disclosed a total of nearly $132 billion in cryptocurrency purchase plans since January.

[Regulatory Red Lines and Information Control Challenges]

The rules in the United States regarding “material non-public information” require strict control. External parties who obtain sensitive details often need to sign a “wall-crossed agreement” and have it documented for regulatory agencies to trace information insiders. Former U.S. Attorney for the Southern District of New York, Elisha Kobre, pointed out that the insider trading ban not only covers company executives but also includes anyone who trades after obtaining significant information. Although most executives did not sell their holdings before the transition (as SEC records show), the unusual fluctuations in stock prices have still raised compliance concerns.

[Typical Case In-Depth Analysis]

• SharpLink Case: This marketing company, which provides services for sports betting and casinos, announced on May 27 that it purchased $425 million worth of Ethereum. In the first three trading days, the stock price doubled from $3 to $6 without any public documents, and after the news was released, it soared to nearly $36.
• CEA Industries Case: Announced at the end of July to raise 500 million USD in BNB holdings. To reduce insider trading, the trading team concealed the company code during the roadshow and only disclosed it to investors after the market closed on Friday, July 25.
• Verb Technology Case: Even with the same confidentiality measures, the stock price still rose nearly 60% within four hours before the announcement of the $558 million TON purchase plan on Monday.

[Enterprise Strengthens Information Control Measures]

Many companies are strengthening processes to prevent information leaks. Louis Camhi of Architect Partners bluntly stated, “This is a poor performance for everyone,” calling for a quick fix to the processes. Some companies have compressed the investor roadshow time to two trading days. David Namdar, CEO of CEA Industries (now renamed BNB Network Company), stated that to minimize leak risks, they deliberately choose to disclose codes after Friday’s close and release news on Monday’s open.

[Bitcoin Investor Strategies]

The trend of corporate crypto asset allocation has multiple impacts on the Bitcoin market:

1. Liquidity Injection: Continuous entry of billion-dollar enterprise funds constitutes long-term benefits.
2. Regulatory Risk: Insider trading investigations may trigger short-term market volatility.
3. Herding Effect: It is recommended to pay attention to the potential allocation plans of small and medium-sized enterprises with ample cash.
4. On-chain monitoring: Use blockchain analysis tools to track enterprise wallet movements and seize opportunities.

Investors should be wary of abnormal price fluctuations before the announcement of news to avoid becoming the counterpart in insider trading.

[Conclusion]

The allocation of corporate Crypto Assets has evolved from innovative practices to a large-scale trend, but recent frequent information leakage suspicions have sounded the alarm for regulation. As more companies join this wave, information management and compliance disclosure will become key to the healthy development of the market. While Bitcoin investors enjoy the benefits of institutional capital entering the market, they need to enhance their sensitivity to regulatory policies and prevent market fluctuations caused by potential compliance risks.