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Potential Criminal and Civil Penalties of Digital Asset Exchanges

This article discusses the potential criminal and civil penalties that companies can face if their employees engage in insider trading in digital assets, and suggests several measures that exchanges can take to reduce their exposure from such risks.


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Imagine the following. An employee of the proprietary trading arm of a digital asset trading exchange learns confidential information from a colleague in another division that their employer will soon be publicly listing a new cryptocurrency token for trading on the exchange. The trading employee buys units of the token for the exchange’s benefit and for his own account before the public learns of the upcoming listing, the units’ market price skyrockets when the listing is announced, and the employee sells the units at a profit.

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