Major stock jumps around crypto moves raise suspicions of insider activity
MEI Pharma’s stock surged in mid-July, but not because of a breakthrough in cancer treatment. The company announced it would allocate $100 million of its cash reserves into Litecoin. Following the news, the share price jumped from $3 to nearly $7.
What stood out was that the stock had already been climbing in the days before the announcement, despite no SEC filings, press releases, or notable social media activity.
Other small-cap companies also experienced sharp gains shortly before revealing plans to add cryptocurrency to their treasuries, a trend that has raised concerns that some investors may have traded on information not yet public.
The corporate crypto treasury trend began with billionaire Michael Saylor.
In 2020, Saylor — founder and chairman of Strategy, formerly MicroStrategy — said the software company would hold Bitcoin as a reserve asset. Investors began treating its shares as a proxy for Bitcoin’s price.
Other firms soon followed. A Japanese budget hotel chain began purchasing Bitcoin in 2024, and the movement spread.
This year the pace has quickened. Since January, 184 publicly listed companies have disclosed crypto acquisitions worth almost $132 billion, according to Architect Partners, a crypto advisory and financing firm.
“We’ve kind of hit this point of saturation,” said Louis Camhi in a Fortune report. He added that investors are now waiting to see whether those holdings deliver returns.
Not all of the gains appear to be going to retail traders
In several instances, stocks rallied just ahead of announcements.
SharpLink, a marketing company serving sportsbooks and casinos, traded under $3 through April and early May.
On May 27, it announced a $425 million Ethereum purchase, sending shares to nearly $36. Yet in the three trading days prior, the stock had already doubled from $3 to $6 without any filings or press releases.
U.S. rules on “material non-public information” require strict safeguards. Outsiders with access to confidential information are generally “wall-crossed” and tracked so regulators can see who was informed.
Although crypto treasury deals can take months to prepare, final marketing often takes place just before the announcement through brief investor meetings. SharpLink’s three-day investor outreach coincided with its price move. Mill City also saw a stock rally during its two-day roadshow.
Insider trading rules extend beyond corporate insiders; they cover anyone trading on significant tips, said Elisha Kobre, a partner at Sheppard Mullin and a former federal prosecutor in New York’s Southern District.
Who is benefiting remains unclear
A few executives disclosed stock grants or purchases before pivot announcements, but SEC records show most did not sell.
Companies are now working to tighten controls to prevent leaks. “It’s a bad look for everyone here,” said Camhi, calling for quick improvements. Mackintosh said his team cut down investor outreach for another deal to just two trading days.
Some firms have taken extra precautions. In late July, CEA Industries raised $500 million to buy BNB. To reduce pre-announcement activity, dealmakers withheld the company’s ticker during meetings, only sharing it with investors after markets closed on Friday, July 25, CEO David Namdar said. The company, now renamed BNB Network Company, aimed “to minimize the risk of leaks or volatility” before releasing the news the following Monday.
A week later, Verb Technology announced a $558 million raise to acquire TON and used the same method, withholding its ticker until after Friday’s close, according to an investor familiar with the deal. Still, the stock jumped nearly 60% in the four hours leading up to the Monday disclosure.
