Crypto Derivative Platform Hegic’s Profitable DeFi Strategy Could Spark Probe From SEC – Here’s Why
Hegic, a crypto derivatives trading platform, may have just exposed itself to an insider trading probe from the U.S. government following a profitable but sketchy trade with an affiliate company.
The platform recently scored $17 million when its pseudonymous founder, Molly Wintermute, announced that she would sunset development for Whiteheart, Hegic’s less popular sister platform.
In her Discord announcement, she revealed that the platform would return its $28 million treasury to investors before shutting down. That prompted a wave of demand for Whiteheart’s token, WHITE, before the payouts were made official, with arbitragers bolstering its price sixfold up to $3500 last month.
Hegic, the larger and ongoing platform, is responsible for initiating the payouts. More pressing, however, is that Hegic purchased almost one-third of WHITE token’s supply just three days before Wintermute announced the Whiteheart’s closure.
Combined with an earlier September purchase, Hegic alone now bears a claim to roughly half of Whiteheart’s entire treasury. Thanks to crypto markets appreciating this month, that’s now $17 million worth of Ether (ETH).
In traditional securities markets, publicly traded companies are barred from trading on private information that they know could swing the market once it becomes public – otherwise known as “insider trading.”
According to securities experts interviewed by CoinDesk, the same rules don’t yet formally apply to cryptocurrencies since regulators are still at odds with how to formally classify them. For Gary Gensler, however – the chairman of the Securities and Exchange Commission (SEC) – that may not matter, since he views the vast majority of crypto as falling under the securities umbrella.
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