Crypto Platform's Affiliated Token Deal Draws Insider Trading Questions
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Crypto derivatives trading platform Hegic made millions by trading tokens from its affiliated project Whiteheart before Whiteheart was shut down. Hegic's treasury bought nearly half of Whiteheart's tokens.
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Experts say this could be a form of insider trading that the SEC may investigate, though the legal status is unclear since Hegic and Whiteheart are decentralized platforms, not traditional companies.
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Hegic's sole developer Molly Wintermute announced she was shutting down Whiteheart, causing its token price to surge over 6x. Molly had bought 16% of the tokens for Hegic 2 months before.
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The Whiteheart shutdown plan will refund original investors their money back, an uncommon happy ending. Hegic's treasury stands to gain $17 million from its Whiteheart token trades.
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Experts think this case highlights the legal "grey areas" in crypto and DeFi that regulators are seeking to address around insider trading and investor protection issues.