Companies that buy crypto are seeing big stock moves — and some of those moves happened before the news.
A report by Fortune has disclosed that several firms which announced large purchases of cryptocurrency also saw sharp stock gains in the days just before their public announcements.
That timing has raised red flags for traders, regulators and investors who say those price jumps look like classic front-running — trading on material non-public information.
Suspicious Preannouncement Jumps
According to the report, MEI Pharma’s stock nearly doubled just before it revealed a $100 million purchase of Litecoin.
SharpLink’s shares rose from $3 to $6 in the three trading days before announcing it would add $425 million in Ethereum to its balance sheet.
Mill City Ventures’ stock more than tripled in the two days before it announced a crypto-related fundraise. No new SEC filings, press releases or social chatter were linked to those moves. So the pattern is hard to ignore.
On Crypto, Roadshows & Information Leakage
Based on the report, a common thread appears to be the roadshow — the private meetings where companies pitch deals to selected investors before an announcement.
Roadshows can put many people in a position to hear sensitive plans. When those meetings line up with suspicious stock pops, researchers and executives say information leakage is the likely cause.
Some analysts have likened the behavior to the same sort of insider trading that often shows up around takeover attempts. One academic study even found that many illegal insider trading cases are tied to takeover news that leaks before it is made public.
What The Law Says
US law bans trading on material non-public informa
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Author: Christian Encila
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