What it is
This prohibited activity involves an individual with privileged access to confidential information, such as an upcoming merger, product launch, or regulatory action, trading based on that knowledge before it becomes public. The information must be "material" (likely to influence a reasonable investor's decision) and "non-public" (not widely disseminated). This practice undermines market fairness and integrity.
In crypto, insider trading can occur when employees of exchanges or project teams trade tokens based on advance knowledge of listings, delistings, or protocol updates. Regulators and prosecutors have brought enforcement actions against individuals in the crypto space for alleged insider trading, treating digital assets similarly to traditional securities in this context, even if the assets themselves are not formally classified as securities.
Why it matters
Insider trading creates an unfair market, potentially causing losses for retail investors who trade without the same privileged information.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice