TechFlow news — On February 18, Bitwise executive Jeff Park pointed out that under the framework of U.S. securities law, insider trading that results in losses may not technically constitute a violation. This is because, as a form of securities fraud, insider trading must satisfy three elements: duty, breach, and damages.
Park explained that the U.S. Securities and Exchange Commission (SEC) primarily defines insider trading based on the anti-fraud provisions of the Securities Exchange Act. Since the essence of insider trading is fraud in securities transactions, if no profit is made from the trade, it becomes difficult to prove actual harm to others. This also explains why civil penalties in insider trading cases are typically calculated as multiples of "profits gained" or "losses avoided."
Park added that for crypto assets such as meme coins, if they are not classified as securities, insider trading regulations would not apply. Instead, oversight should be conducted from the perspective of market manipulation or fraud.
